Annual Report 2009-2010 - Goldiam

Mr. Manhar R. Bhansali, Chairman & Managing Director, receiving the“PIONEER OF THE YEAR” Award instituted by IDCA (Indian Diamond &

Colorstone Association), 56 West, 45th Street, New York,NY 10036 on 5th June, 2010 at Las Vegas, U.S.A.

BOARD OF DIRECTORS

MANHAR R. BHANSALI CHAIRMAN & MANAGING DIRECTORRASHESH M. BHANSALI VICE-CHAIRMAN & MANAGING DIRECTORAJAY M. KHATLAWALA DIRECTORRAJESH G. KAPADIA DIRECTORDR. R. SRINIVASAN DIRECTOR

COMPANY SECRETARY & LISTINGCOMPLIANCE OFFICER Bombay Stock Exchange LimitedRACHANA V. VORA Phiroze Jeejeebhoy Towers,e-mail: [email protected] Dalal Street, Mumbai - 400 001

AUDITORS National Stock Exchange of India LimitedPULINDRA PATEL & CO., "Exchange Plaza", Bandra Kurla Complex,Chartered Accountants Bandra (East), Mumbai - 400 051

BANKERS DEMAT DETAILSThe Hongkong & Shanghai Banking Corporation Ltd. ISIN: INE025B01017Punjab National BankYES Bank Limited

REGISTERED OFFICE TWENTY THIRD ANNUALGems & Jewellery Complex, GENERAL MEETING will be heldSEEPZ, Andheri (East), on Thursday, 12th August, 2010 at 3.00 p.m.Mumbai - 400 096 at 'TRIBUNE 1' Banquet Hall, 6th floor,e-mail: [email protected] Hotel Tunga International,Website: www.goldiam.com M.I.D.C. Central Road, Andheri (East),

Mumbai 400 093DIAMOND PROCUREMENT OFFICE2, Prasad ChambersOpera House, Mumbai - 400 004

REGISTRAR AND TRANSFER AGENTS Contents:M/s. Link Intime India Pvt. Ltd. Notice ................................................................. 04C-13, Pannalal Silk Mills Compound, Directors' Report ............................................... 08LBS Marg, Bhandup (West), Management Discussion and Analysis ........... 11Mumbai - 400 078 Report on Corporate Governance ................... 12Tel no.: 25946970-78 Fax: 25946969 Auditors' Report ................................................. 18e-mail: [email protected] Balance Sheet ................................................... 20BRANCH AT: Profit and Loss Account ................................... 21203, Davar House, 2nd floor, Cash Flow statement ........................................ 22D. N. Road, Fort, Schedules .......................................................... 23Mumbai - 400 001 Notes on Account .............................................. 31Tel: 22694127 Statement relating to Subsidiary Companies . 44

Auditors' Report on Consolidated Account ..... 45Consolidated Balance Sheet ............................ 46Consolidated Profit & Loss Account ................ 47Consolidated Cash Flow Statement ................ 48Schedules to Consolidated Account ................ 49Annual Accounts of the Subsidiaries ............... 66Attendance Slip & Proxy Form ....................... 159

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Goldiam International Limited

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NOTICENOTICE is hereby given that the TWENTY THIRD ANNUALGENERAL MEETING of the Members ofGOLDIAM INTERNATIONAL LIMITED will be held onThursday, 12th August, 2010 at 3.00 p.m. at 'Tribune 1'Banquet Hall, 6th floor, Hotel Tunga International, M.I.D.C.Central Road, Andheri (East), Mumbai - 400 093 to transactthe following business:

ORDINARY BUSINESS:1. To receive, consider and adopt the audited Balance Sheet

as at 31st March, 2010, the Profit and Loss Account forthe year ended on that date and the Reports of theDirectors and the Auditors thereon.

2. To declare dividend for the financial year ended31st March, 2010.

3. To appoint a Director in place of Dr. R. Srinivasan,who retires by rotation and, being eligible, offers himselffor re-appointment.

4. To appoint M/s. Pulindra Patel & Co., CharteredAccountants, as the Auditors of the Company to hold officefrom the conclusion of this Annual General Meeting untilthe conclusion of the next Annual General Meeting and tofix their remuneration.

SPECIAL BUSINESS:

5. To consider and, if thought fit, to pass the following resolution,with or without modification, as an Ordinary Resolution:"RESOLVED pursuant to the provisions of Sections 198,269, 309, 310, 349 read with Schedule XIII and all otherapplicable provisions, if any, of the Companies Act, 1956(including any statutory modification(s) or re-enactmentthereof, for the time being in force) and any amendmentsmade thereto from time to time that the consent of theCompany be and is hereby accorded to remunerateMr. Rashesh M. Bhansali, Vice Chairman & ManagingDirector, with effect from 1st April, 2010 on the terms andconditions as detailed hereunder:

PART A:Basic Salary: Rs.3,00,000/- per month

PART B:

1. Medical Reimbursement:Reimbursement of medical expenses incurred for selfand family members subject to a ceiling of one month'ssalary in a year or three month's salary over a periodof three years.

2. Leave Travel Concession:Leave Travel Concession for self and family once in ayear incurred in accordance with the Rules of theCompany for the time being in force.

3. Club Fees:Membership fees of two clubs.

4. Gratuity:Gratuity shall be payable as per the provisions ofthe Payment of Gratuity Act, 1972 as amended fromtime to time.

FURTHER RESOLVED THAT Mr. Rashesh M. Bhansali,Vice Chairman & Managing Director, shall also be entitledto commission as a percentage of the net profits of theCompany, as may be decided by the Board of Directorsfrom time to time, subject to the ceiling fixed underSection 309 and Schedule XIII to the Companies Act, 1956,as amended from time to time.

FURTHER RESOLVED THAT the Board of Directors ofthe Company be and is hereby authorised to take all steps/actions and do all such acts, deeds, matters and things asit may in its absolute discretion deem necessary, desirable,expedient or proper to give effect to this resolution."

6. To consider and, if thought fit, to pass the following resolution,with or without modification, as an Ordinary Resolution:

"RESOLVED pursuant to the provisions of Sections 198,269, 309, 310, 311, 349 read with Schedule XIII and allother applicable provisions, if any, of the CompaniesAct, 1956 (including any statutory modification(s) orre-enactment thereof, for the time being in force) and anyamendments made thereto from time to time that theconsent of the Company be and is hereby accorded tothe re-appointment of Mr. Rashesh M. Bhansali as theVice Chairman & Managing Director of the Company for aperiod of 5 years with effect from 1st February, 2011 andthe payment of remuneration to him on the terms andconditions as detailed hereunder:

PART A:

Basic Salary: Rs.3,00,000/- per month

PART B:

1. Medical Reimbursement:Reimbursement of medical expenses incurred for selfand family members subject to a ceiling of one month'ssalary in a year or three month's salary over a periodof three years.

2. Leave Travel Concession:Leave Travel Concession for self and family once in ayear incurred in accordance with the Rules of theCompany for the time being in force.

3. Club Fees:Membership fees of two clubs.

4. Gratuity:Gratuity shall be payable as per the provisions of thePayment of Gratuity Act, 1972 as amended from timeto time.

FURTHER RESOLVED THAT Mr. Rashesh M. Bhansali,Vice Chairman & Managing Director, shall also be entitledto commission as a percentage of the net profits of theCompany, as may be decided by the Board of Directorsfrom time to time, subject to the ceiling fixed under Section309 and Schedule XIII to the Companies Act, 1956,as amended from time to time.


7. To consider and, if thought fit, to pass the following resolution,with or without modification, as a Special Resolution:

"RESOLVED pursuant to the provisions of Sections 198,269, 309, 349 read with Schedule XIII and all otherapplicable provisions, if any, of the Companies Act, 1956(including any statutory modification(s) or re-enactmentthereof, for the time being in force) and any amendmentsmade thereto from time to time that the consent of theCompany be and is hereby accorded to the re-appointmentof Mr. Manhar R. Bhansali as the Chairman & ManagingDirector of the Company for a period of 5 years with effectfrom 24th January, 2011.

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Annual Report 2009-2010


By Order of the Board of Directors

Place: Mumbai RACHANA V. VORADate: 30th May, 2010 Company SecretaryRegd. Office:Gems & Jewellery Complex,SEEPZ (SEZ), Andheri (E),Mumbai - 400 096.

NOTES:1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE

MEETING IS ENTITLED TO APPOINT A PROXY TOATTEND AND VOTE INSTEAD OF HIMSELF AND THEPROXY NEED NOT BE A MEMBER OF THE COMPANY.

THE INSTRUMENT APPOINTING PROXY, DULYCOMPLETED AND SIGNED, MUST BE DEPOSITEDAT THE REGISTERED OFFICE OF THE COMPANYNOT LESS THAN 48 HOURS BEFORE THECOMMENCEMENT OF THE MEETING.

2) An Explanatory Statement pursuant to Section 173 (2) ofthe Companies Act, 1956 in respect of the SpecialBusiness to be transacted at the meeting as set out aboveis annexed hereto and forms part of the Notice.

3) The details of the Directors seeking re-appointment at theforthcoming Annual General Meeting as stipulated underClause 49 of the Listing Agreement with the StockExchanges are also annexed.

4) The Register of Members and Share Transfer Books willremain closed from Wednesday, 4th August, 2010 toThursday, 12th August, 2010 (both days inclusive).

5) Subject to the provisions of Section 206A of the CompaniesAct, 1956, dividend as recommended by the Board ofDirectors, if declared at the Annual General Meeting, willbe paid to those members whose names appear in theRegister of Members of the Company after giving effectto all valid share transfers in physical form lodged with theRegistrar and Transfer Agents on or before 3rd August, 2010.In respect of the shares held in dematerialized form, thedividend will be payable on the basis of the beneficialownership as per the details furnished by NationalSecurities Depository Limited and Central DepositoryServices (India) Limited as at the close of the businesshours on 3rd August, 2010 for this purpose.

6) Members holding shares in dematerialized form arerequested to note that the bank particulars as registeredagainst their respective depository accounts will be usedby the Company for the payment of dividend throughElectronic Clearing Service (ECS) or for printing onDividend Warrants pursuant to the SEBI directive videCircular No. D&CC/ FITTC/Cir-4/2001 dated 13.11.2001wherever applicable. Members are therefore requestedto update their bank account particulars, change of addressand other details with their respective DepositoryParticipants for shares held in dematerialized form andwith the Registrar and Transfer Agents for the shares heldin physical form.

7) Members holding shares in physical form and desirous ofavailing the facility of ECS for receiving direct credit ofdividend in their Bank account are advised to submitparticulars of their bank account viz. name and addressof the branch of the bank, 9 digit MICR code of the bankand branch, type of account and the account number alongwith a blank cancelled cheque or photocopy of a chequeor front page of the bank passbook for verification ofthe bank particulars to M/s. Link Intime India Pvt. Ltd.,the Registrar and Transfer Agents of the Company.

8) As a measure of economy, copies of Annual Reportwill not be distributed at the Annual General Meeting.Members are, therefore, requested to bring their copiesof Annual Report with them along with the Attendanceslip duly signed and completed.

9) Members, who hold shares in dematerialized form, arerequested to quote their Client ID number and DP IDnumber and those who hold shares in physical form arerequested to quote their Folio numbers in the Attendanceslip for easier identification of attendance at the meeting.

10) In all correspondence with the Company, members arerequested to quote their Folio numbers and in case theshares are held in the dematerialized form, they shouldquote their Client ID number and DP ID number.

11) Members are requested to note that if physical documents,viz. Demat Request Forms (DRF) and share certificates,etc. are not received from their DPs by the Company/Registrar within a period of 14 days from the date ofgeneration of the Demat Request Number (DRN) fordematerialization, the DRN will be treated as rejected/cancelled. Upon rejection/cancellation of the DRN, a freshDRF has to be forwarded along with the share certificatesby the DPs to the Company/Registrar. This note is only tocaution shareholders that they should ensure that theirDPs do not delay in sending the DRF and share certificatesto the Company/Registrar after generating the DRN.

12) Members desirous of obtaining any information concerningthe accounts are requested to write to the Company atleast one week before the meeting so as to enable theManagement to keep the information ready. Replies willbe provided only at the meeting.

13) Relevant documents referred to in the accompanyingNotice are available for inspection by the members at theRegistered Office of the Company on all working daysbetween 11.00 a.m. to 1.00 p.m. upto the date of theAnnual General Meeting.

14) Information u/s 205A read with the Companies UnpaidDividend (Transfer to General Reserve Account of theCentral Government) Rules, 1978 as amended is givenbelow:

(i) Pursuant to Section 205 of the CompaniesAct, 1956 all unclaimed/unpaid dividends up to thefinancial year ended 31.03.1995 have beentransferred to the General Reserve Account of theCentral Government. Shareholders, who have not yetencashed their dividend warrants for the said periodare requested to claim the amount from the Registrarof Companies, Maharashtra, CGO Complex, 2nd floor,"A" Wing, CBD-Belapur,Navi Mumbai 400 614 bymaking an application in the prescribed form;

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(ii) Consequent to amendment to Section 205A of theCompanies Act, 1956 and introduction of Section205C by the Companies (Amendment) Act, 1999, theamount of dividend for the subsequent yearsremaining unpaid or unclaimed for a period of sevenyears from the date of transfer to Unpaid DividendAccount of the Company is to be transferred to theInvestor Education and Protection Fund set up by theGovernment of India and no payments shall be madein respect of any claims against the Fund. Accordingly,the unpaid/unclaimed dividend amount for the yearsended on 31.03.1996, 31.03.1997, 31.03.1998,31.03.1999, 31.03.2000, 31.03.2001 and 31.03.2002have been transferred to the Fund. The unpaid/unclaimed dividend amount for the year ended on31.03.2003 will be transferred in August, 2010. Memberswho have not so far encashed their dividend warrant(s)for the year ended 31.03.2003 or any of subsequentyears are requested to seek the issue of the duplicatewarrant(s) by writing to the Company's Registrar andTransfer Agents, M/s. Link Intime India Pvt. Ltd.

EXPLANATORY STATEMENT PURSUANT TOSECTION 173(2) OF THE COMPANIES ACT, 1956 FORMINGPART OF THE NOTICE DATED 30TH MAY, 2010:

ITEM NO. 5The members of the Company had, at the Annual GeneralMeeting held on 26th July, 2005, approved the re-appointmentof Mr. Rashesh M. Bhansali as the Vice Chairman & ManagingDirector of the Company for a period of 5 years with effect from1st February, 2006 on a remuneration of a Basic Salary ofRs.7,75,000/- per month, reimbursement of medical expensessubject to a ceiling of one month's salary in a year or threemonth's salary over a period of three years, leave travelconcession for self and family once in a year, fees of two clubs,personal accident insurance premium not exceeding Rs.5,000/-per annum, car and telephone at residence for office use, gratuityas per the provisions of the Payment of Gratuity Act, 1972(subject to a ceiling of Rs.3,50,000/-) and privilege leave asapplicable to other members of the staff. He was also entitled toCommission out of the net profits of the Company as decidedby the Board from time to time subject to the ceiling fixed underthe provisions of the Companies Act, 1956.The remuneration paid to Mr. Rashesh M. Bhansali,Vice Chairman & Managing Director, was, however,discontinued with effect from January 2008 owing to thelosses/ inadequate profits. After having undergonechallenging times in the financial year 2008-09, the Companyis experiencing an upward trend and registering profitsand it was felt prudent to pay him remuneration, with effectfrom 1st April, 2010, of Basic Salary of Rs.3,00,000/- permonth, reimbursement of medical expenses incurred forself and family members subject to a ceiling of onemonth's salary in a year or three month's salary over aperiod of three years, leave travel concession for self andfamily once in a year incurred in accordance with the Rulesof the Company for the time being in force, membershipfees of two clubs, gratuity as per the provisions of the Paymentof Gratuity Act, 1972 as amended from time to timeand Commission as a percentage of the net profits ofthe Company as decided by the Board from time to timesubject to the ceiling fixed under the provisions of theCompanies Act, 1956.

Mr. Rashesh M. Bhansali has rich and wide experience in thefield of diamonds and jewellery and has been guiding forcebehind the Company since the past 22 years. Under his ableleadership and guidance the Company has reached newheights. He is a Director on the Board of Diagold DesignsLimited, Goldiam Jewels Limited, Goldiam Jewellery Limitedand Goldiam USA, Inc., subsidiaries of the Company.The Board recommends the resolution for the approval of themembers.

None of the Directors except Mr. Rashesh M. Bhansali andhis father Mr. Manhar R. Bhansali is deemed to be concernedor interested in this resolution.

The Explanatory statement together with the accompanyingNotice should be treated as an abstract under Section 302.

ITEM NO. 6The members of the Company had, at the Annual GeneralMeeting held on 26th July, 2005, approved there-appointment of Mr. Rashesh M. Bhansali as theVice Chairman & Managing Director of the Company for a periodof 5 years with effect from 1st February, 2006 on a remunerationof a Basic Salary of Rs.7,75,000/- per month, reimbursement ofmedical expenses subject to a ceiling of one month's salary in ayear or three month's salary over a period of three years, leavetravel concession for self and family once in a year, fees of twoclubs, personal accident insurance premium not exceedingRs.5,000/- per annum, car and telephone at residence for officeuse, gratuity as per the provisions of the Payment of GratuityAct, 1972 (subject to a ceiling of Rs.3,50,000/-) and privilegeleave as applicable to other members of the staff. He was alsoentitled to Commission out of the net profits of the Company asdecided by the Board from time to time subject to the ceilingfixed under the provisions of the Companies Act, 1956.

The remuneration to Mr. Rashesh M. Bhansali, Vice Chairman& Managing Director, was, however, discontinued with effectfrom January 2008 owing to the losses/ inadequate profits.With the Company's financial performance improving, it wasfelt prudent to remunerate him with effect from 1st April, 2010by way of Basic Salary of Rs.3,00,000/- per month,reimbursement of medical expenses incurred for self and familymembers subject to a ceiling of one month's salary in a year orthree month's salary over a period of three years, leave travelconcession for self and family once in a year incurred inaccordance with the Rules of the Company for the time beingin force, membership fees of two clubs, gratuity as per theprovisions of the Payment of Gratuity Act, 1972 as amendedfrom time to time and Commission as a percentage of the netprofits of the Company as decided by the Board from time totime subject to the ceiling fixed under the provisions of theCompanies Act, 1956.

The present term of his appointment expires on31st January, 2011 and the Board of Directors of the Company,at the meeting held on 30th May, 2010, decided, subject to theapproval of the members of the Company, to re-appoint himfor a further period of 5 years w.e.f. 1st February, 2011 at aremuneration of Basic Salary of Rs.3,00,000/- per month,reimbursement of medical expenses incurred for self and familymembers subject to a ceiling of one month's salary in a year orthree month's salary over a period of three years, leave travelconcession for self and family once in a year incurred inaccordance with the Rules of the Company for the time beingin force, membership fees of two clubs, gratuity as per the

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provisions of the Payment of Gratuity Act, 1972 as amendedfrom time to time and Commission as a percentage of the netprofits of the Company as decided by the Board from time totime subject to the ceiling fixed under the provisions of theCompanies Act, 1956.

Mr. Rashesh M. Bhansali has rich and wide experience in thefield of diamonds and jewellery and has been guiding forcebehind the Company since the past 22 years. Under his ableleadership and guidance, the Company has reached newheights. He is a Director on the Board of Diagold Designs Limited,Goldiam Jewels Limited, Goldiam Jewellery Limited and GoldiamUSA, Inc., subsidiaries of the Company. The Board recommendsthe resolution for the approval of the members.

None of the Directors except Mr. Rashesh M. Bhansali andhis father Mr. Manhar R. Bhansali is deemed to be concernedor interested in this resolution.


ITEM NO. 7The members of the Company had, at the Annual GeneralMeeting held on 26th July, 2005, approved the re-appointmentof Mr. Manhar R. Bhansali as the Chairman & ManagingDirector of the Company for a period of 5 years with effectfrom 24th January, 2006 and also approved the payment ofremuneration to him on the basis of performance of theCompany as a percentage of the profits of the Companycomputed as per the provisions of the Companies Act, 1956as may be decided by the Board from time to time and the useof the Company's car and telephone at residence for officeuse. As the present term of his appointment expires on23rd January, 2011, the Board of Directors of the Company,

at the meeting held on 30th May, 2010, decided, subject tothe approval of the members of the Company, to re-appointhim for a further period of 5 years w.e.f. 24th January, 2011 atno remuneration.

Mr. Manhar R. Bhansali, promoter of the Company, enteredthe diamond business more than 4 decades ago and has beenthe Chairman of the Company since its inception.His extensive knowledge and experience in the field ofdiamonds and jewellery has constantly guided the Company.He is the driving force behind the success of the Company.He is also the Chairman of Company's subsidiariesDiagold Designs Limited, Goldiam Jewels Limited andGoldiam Jewellery Limited.

The Board recommends the approval of the members to theresolution as a Special resolution as he will attain the age of70 years and as required under Schedule XIII to the CompaniesAct, 1956 his re-appointment should be approved by themembers of the Company vide a Special Resolution.

None of the Directors except Mr. Manhar R. Bhansali and hisson Mr. Rashesh M. Bhansali is deemed to be concerned orinterested in this resolution.


By Order of the Board of Directors

Place: Mumbai RACHANA V. VORADate: 30th May, 2010 Company SecretaryRegd. Office:Gems & Jewellery Complex,SEEPZ (SEZ), Andheri (E),Mumbai - 400 096

Details of the Directors seeking re-appointment at the Annual General Meeting

Particulars Dr. R. Srinivasan Mr. Rashesh M. Bhansali Mr. Manhar R. BhansaliDate of Birth 30th May, 1931 06th July, 1968 20th September, 1941Date of Appointment 02nd May, 2002 01st September, 1988 10th October, 1986Qualifications Ph.D., CAIIB, FIB, Doctorate T.Y.B.Com. Int. Com.

in Banking & FinanceExpertise in specific Wide experience Wide knowledge & experience Wide knowledge & experience infunctional area in Banking & Finance in the field of diamonds & jewellery the field of diamonds & jewelleryDirectorships held in • J Kumar Infraprojects Ltd. • Diagold Designs Ltd. • Diagold Designs Ltd.other Public Companies • Elder Pharmaceuticals Ltd. • Goldiam Jewels Ltd. • Goldiam Jewels Ltd.(excluding Foreign • McLeod Russel India Ltd. • Goldiam Jewellery Ltd. • Goldiam Jewellery Ltd.Companies and • Graphite India Ltd.Section 25 Companies) • Shalimar Paints Ltd.

• Williamson Magor & Co. Ltd.• XL Telecom & Energy Ltd.

Memberships/ Audit Committee Nil NilChairmanships of • J Kumar Infraprojects Ltd.Committees of other • Elder Pharmaceuticals Ltd.Public Companies • McLeod Russel India Ltd.*(includes only Audit • Graphite India Ltd.and Shareholders'/ • Shalimar Paints Ltd.*Investors' Grievance • Williamson Magor & Co. Ltd.Committees) • XL Telecom & Energy Ltd.*

Shareholders'/ Investors'Grievance CommitteeElder Pharmaceuticals Ltd.*

Number of shares held Nil 5350000 7103428

* Chairman of the Committee

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DIRECTORS' REPORTDear Members,

Your Directors have pleasure in presenting this TwentyThird Annual Report on the affairs of the Company togetherwith the Audited Statements of Accounts for the year endedon 31st March, 2010.

FINANCIAL RESULTS: (Rupees in Lacs)

Year ended Year ended31.03.2010 31.03.2009

Sales for the year 5935.17 5593.97

Profit before Interest,depreciation & taxation 614.02 (1217.39)Less: Interest &Finance Charges 20.68 14.07Operating profit beforedepreciation & taxation 593.34 (1231.46)Less: depreciation,amortization & impairmentof asset 122. 57 163.45

Profit before taxation 470.77 (1394.91)Provision for taxation (40.46) (32.60)

Profit after taxation 511.23 (1362.31)Add: Balance brought forward 7156.83 8519.14

Profit available for appropriation 7668.06 7156.83Appropriation:Proposed Dividend 249.46 NILProvision for Tax onProposed Dividend 41.43 NILBalance carried forwardto Balance Sheet 7377.17 7156.83

OPERATIONS:After having undergone challenging times in the financialyear 2008-09, the Indian gems and jewellery industry isexperiencing an upward trend and the same is beingreflected in the performance of the Company. The turnoverof the Company during the financial year 2009-10 wasRs.5935.17 lacs as compared to Rs.5593.97 lacs for theprevious year and the Company has earned a profit ofRs.511.23 lacs as compared to a net loss of Rs.1362.31 lacsfor the previous year.

DEPOSITS:The Company has not invited/ accepted any deposit fromthe public during the year ended 31st March, 2010. Therewere no unclaimed or unpaid deposits as on 31st March, 2010.

DIVIDEND:With the Company's performance improving and itregistering profits, your Directors recommend a dividendof Re.1/- per equity share of Rs.10/- each fully paid-up (10%)for the financial year ended 31st March, 2010.

BUY-BACK OF EQUITY SHARES:Pursuant to the approval of the Board of Directors underSection 77A of the Companies Act, 1956 to buy-back fully

paid-up equity shares of the Company at a price not exceedingRs.50/- per equity share from the open market throughthe Stock Exchanges for an aggregate amount notexceeding Rs.5.25 crores being 3.53% of the aggregate ofthe Company's total paid-up equity share capital and freereserves as on March 31, 2009, the Company has, duringthe year under report, bought back 6,00,000 equity sharesfor a total consideration of approximately Rs.2.32 crores(exclusive of Brokerage, STT and other charges) utilizing theGeneral Reserve and Securities Premium accounts andall the equity shares bought back have been extinguished.

SUBSIDIARY COMPANIES:

During the year under report, Goldiam HK Limited,Hong Kong, a subsidiary of the Company then, had offeredshares on Rights basis to all the shareholders; however, inview of the global economic slowdown faced by theCompanies then, the Company had not subscribed to theRights Issue and consequently, the shareholding of theCompany in Goldiam HK Limited had fallen below 50% andGoldiam HK Limited had ceased to be a subsidiary of theCompany. Diagold Designs Limited has, during the yearunder report, incorporated a Limited Liability Partnership,Temple Designs LLP, to cater to the retail jewellery market.

As per the provisions of Section 212(1) of the CompaniesAct, 1956 copies each of the Balance Sheet, Profit &Loss Account, Reports of the Board of Directors and theAuditors of the subsidiary companies, viz. DiagoldDesigns Limited, Goldiam Jewels Limited, GoldiamJewellery Limited and Goldiam USA, Inc. and step-downsubsidiary OOO Tiara Jewels and other statements/certificates as required are attached to this AnnualReport. Pursuant to Accounting Standard AS-21 issuedby the Institute of Chartered Accountants of India,Consolidated Financial Statements are also attached.The turnover and profit / (loss) after tax of the subsidiariesare given below:

Subsidiary Turnover Profit/(Loss)(Rs.) (Rs.)

1. Diagold Designs Limited 4852.04 lacs (208.86 lacs)

2. Goldiam Jewels Limited 1151.01 lacs (27.64 lacs)

3. Goldiam Jewellery Limited 6075.42 lacs 575.62 lacs

4. Goldiam USA, Inc. 1255.50 lacs (44.71) lacs

5. OOO Tiara Jewels* 23.95 lacs 3.65 lacs

* Subsidiary of Diagold Designs Limited

DEMATERIALIZATION:

More than 97% of the shares of the Company are indematerialized form. Your Directors request all the memberswho have not yet got their holdings dematerialized to do soto enable easy trading of the shares as the shares of theCompany are compulsorily traded in dematerialized form.

DIRECTORS:

As per the provisions of Section 256 of the CompaniesAct, 1956 and the Articles of Association of the Company,Dr. R. Srinivasan, Director of the Company, retires by

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rotation at the forthcoming Annual General Meeting and,being eligible, offers himself for re-appointment.Your Directors recommend his re-appointment.

The terms of appointments of Mr. Manhar R. Bhansali,Chairman & Managing Director, and Mr. Rashesh M. Bhansali,Vice Chairman & Managing Director, expire on23rd January, 2011 and 31st January, 2011 respectivelyand your Directors recommend their re-appointment for aperiod of five years w.e.f. 24th January, 2011 and1st February, 2011 respectively on the terms and conditionsas mentioned in the Notice of the Annual Generalof Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 217(2AA) of theCompanies Act, 1956 with respect to Directors'Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of annual accounts for thefinancial year ended 31st March, 2010, the applicableaccounting standards had been followed along withproper explanation relating to material departures;

(ii) that the directors had selected such accounting policiesand applied them consistently and made judgementsand estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of theCompany at the end of the financial year and of theprofit or loss of the Company for the year under review;

(iii) that the directors had taken proper and sufficient carefor the maintenance of adequate accounting records inaccordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of the Companyand for preventing and detecting fraud and otherirregularities;

(iv) that the directors had prepared the accounts forthe financial year ended 31st March, 2010 on a'going concern' basis.

AUDITORS:

M/s. Pulindra Patel & Co., Chartered Accountants, retire atthe forthcoming Annual General Meeting and, being eligible,have consented for re-appointment. Your Directorsrecommend their re-appointment.

REPORT ON CORPORATE GOVERNANCE:

A separate report on Corporate Governance is attachedto this report along with Statutory Auditors' certificate onits compliance.

(A) CONSERVATION OF ENERGY, (B) TECHNOLOGYABSORPTION, (C) FOREIGN EXCHANGE EARNINGS ANDOUTGO:As required under the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules, 1988 theinformation is furnished herein below:

A. CONSERVATION OF ENERGY:

As the Gems & Jewellery Industry is not covered bythe Schedule prescribed by the said Rules, disclosureof particulars on conservation of energy is not applicableto the Company.

B. TECHNOLOGY ABSORPTION:

The particulars regarding absorption of technology areannexed in the prescribed Form B of the Companies(Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

The Company's main line of business is manufacturingand exporting studded gold jewellery. The Companyhas achieved Export Turnover of Rs.5218.33 lacsduring the year under report, 2009-2010, as comparedto Rs.4811.73 lacs in the previous year, 2008-2009.

Total Foreign Exchange used : Rs.172,979,944/-

Total Foreign Exchange earned : Rs.515,607,572/-

PARTICULARS OF EMPLOYEES:

None of the employees has received remuneration/ salaryexceeding the limit as stated in Section 217(2A) of theCompanies Act, 1956 read with the Companies (Particularsof Employees) Rules, 1975 as amended.

ACKNOWLEDGEMENTS:

Your Directors take this opportunity to place on recordtheir appreciation and sincere gratitude to Government ofIndia, Government of Maharashtra, SEEPZ (SEZ)Authorities and the Bankers to the Company for theirvaluable support and look forward to their continuedco-operation in the years to come.

Your Directors acknowledge the support and co-operationreceived from the employees and all those who have helpedin the day-to-day management.

For and on behalf of the Board of Directors

Place: Mumbai MANHAR R. BHANSALIDated: 30th May, 2010 CHAIRMAN

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ANNEXURES FORMING PART OF THE DIRECTORS' REPORT

ANNEXURE - I

FORM B

Form for disclosure of particulars with respect toTechnology Absorption, Research and Development(R & D) as per Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988.

Research & Development:

1. Specific areas in which R & D is carried out bythe Company

The Company's R & D is focused on offering highquality, competitively priced, innovative designjewellery to its customers. It places emphasis onlatest technologies for manufacturing diamondstudded gold jewellery which can lead to improvedquality. Goldiam has carried out extensive researchin gold recovery. With the implementation of bettertechniques of gold recovery, the percentage of goldrecovered is higher and wastage has gone downconsiderably. The Company has also carried outin-depth research on casting crucibles. With theadvent of the new casting crucibles, the life of thecrucibles has increased resulting in an increase inthe output by almost 300% per casting. In additionto the invisible setting in diamond, the Company hasalso introduced new micro pave hand set technology.

2. Benefits derived as a result of the above R & D

The R & D activities will enable the Company toreduce the cost of manufacturing jewellery and offerhigh quality, innovative design jewellery which iscompetitively priced to its customers thereby increasingcustomer satisfaction, revenue and profitability.

3. Future plan of action

The Company intends to continue the research inits pursuit for bringing attractively priced, finer qualityproducts to the customers.

4. Expenditure on R & D

R&D is a continuous process and the expenditureis not specifically earmarked for the same and is

debited to the general manufacturing expenses.

(a) Capital NIL

(b) Recurring NIL

(c) Total NIL

(d) Total R & D expenditure asa percentage of total turnover N.A.

Technology absorption, adaptation and innovation:

1. Efforts, in brief, made towards technologyabsorption, adaptation and innovation.

The Company endeavours to keep itself abreast withthe technical developments, innovations and trendsin its line of business and constantly strives toincorporate the same in manufacturing jewellery andimprove the design & quality of its products andreduce the costs.

2. Benefits derived as a result of the above efforts,e.g. product improvement, cost reduction,product development, import substitution, etc.

The benefit wil l be reflected in the areas ofsubstantial cost reduction and higher customersatisfaction through improved product quality.

3. In case of imported technology (imported duringthe last 5 years reckoned from the beginning ofthe financial year), following information may befurnished:

a) Technology imported ) The Company hasb) Year of import ) not imported anyc) Has technology been ) Technology.

fully absorbed )d) If not fully absorbed, )

areas where this has )not taken place, )reasons there for and )future plans of action. )

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Industry Structure and developments:Gems and Jewellery is ranked amongst the fastest growingsectors in the Indian Economy and is also a leading sector forforeign exchange generation. India is gaining prominence asan international sourcing destination for high quality designerjewellery and is one of the largest exporters of gems andjewellery and is the diamond polishing capital of the world.India has several well recognized strengths which have madeit a significant force in the global Gems and Jewellery business,viz. highly skilled yet low-cost labour, established excellence inmanufacturing jewellery and diamond polishing, the mosttechnologically advanced diamond cutting center in the worldand an ability to leverage India's strengths to address thedemands of the global markets.

According to the Gems & Jewellery Export Promotion Council(GJEPC), India's gems and jewellery industry, one of India'sleading foreign exchange earning sectors over the year, haswitnessed a considerable growth in the volume of exports whichwere pegged at US$ 28 billion in the financial year 2009-10.From the export figures of US$ 24495.58 million in the financialyear 2008-09, the exports have shown considerable increaseand stood at US$ 28,414.64 in the financial year 2009-10,thus indicating an increase of 16% in the total gems andjewellery exports. The performance of this industry is criticalas it contributes 13% to India's total merchandise exports.

Opportunities and Threats:Manufacturing excellence, rich heritage of craftsmanship withhigh level of skills, creation of exquisite designs and productionof high volumes at low cost will facilitate in positioning India asthe global destination for all jewellery products. The reductionin the customs duty of Rhodium, a precious metal used forpolishing jewellery, is expected to favour the Industry.

The evolution in the trends in the consumption of jewelleryproducts are an encouragement for the jewellery industry.The Company's focus on emerging markets like Middle East,Thailand, UK, Russia and Japan will greatly benefit the Company.

Economic slowdown was and continues to remain one of themajor threats faced by the Company. Jewellery being a luxuryitem, downturn means less spending by the customers andthe resultant decline in the turnover. Also, the absence of anysubstantially favourable Government policy, incentive orstimulus for the jewellery industry and in particular theexporters, will reduce India's competitive position as diamondand jewellery exporter. Further, the increase in the customsduty of Gold, which constitutes 30% of the cost of the finishedproduct, is expected to be a set-back in offering competitivelypriced jewellery to the customers.

Segment-wise Performance:The Company has two segments viz. jewellery manufacturingand investment activity. The Company has achieved a turnoverof Rs.6262.76 lacs in the jewellery segment and of Rs.494.33lacs in investment activities.

Risks and Concerns:The nature of the Company's business exposes it to severalinherent risks. The Company strives to closely monitor the risksand to mitigate them by adopting suitable, pragmatic strategies.

Bullion Risk: With gold forming approximately 30% of the costof the finished product, the Company is exposed to bullionrisk. The Company hedges its outstanding position mitigatingthe risk associated with the volatility in the gold prices.

Currency Risk: Currency risk arises from exposure to foreigncurrencies and the volatility associated therewith.

100% of our exports have been transacted in US Dollars andthe Company hedges majority of its receivables to mitigatethe risks arising therefrom.Geography Risk: Dependence on any geographic locationmakes the Company's business in that region vulnerable tothe economic slowdown therein. While USA continues to beour prime export destination, we have, with a view to managethe risks, diversified and tapped the markets in Middle East,Thailand, UK, Russia and Japan.Outlook:After having undergone challenging times due to the overalleconomic slowdown and particularly in the jewellery industry inthe financial year 2008-2009, the Indian gems and jewelleryindustry is on the path of recovery, experiencing an upward trend.With the cautious approach adopted by the Company, it isnow well-poised to meet the dynamic challenges faced by theindustry in the short as well long term.Internal Control and its adequacy:The Company has an internal control system commensuratewith its size and nature of business to ensure efficiency ofoperations, compliance with internal control policies andapplicable laws and regulations, protection of resources andassets and accurate reporting of financial transactions.Certified by the Internal Auditors and the Statutory Auditors ofthe Company, the internal control system is also supplementedby extensive internal audits, regular reviews by themanagement and standard policies and guidelines to ensurereliability of financial and other records.Financial Performance:The revival of the global economies and the persistent efforts ofthe Company to sustain its trade relations besides expandingits base to other markets has helped the Company to post amodest growth of 6.10% in turnover for the financial year endedon 31st March, 2010 over the previous financial year. Theturnover for the financial year 2009-2010 was Rs. 5935.17 lacsas compared to Rs.5593.97 lacs for the previous financial year.The Company has earned a net profit of Rs.511.23 lacs ascompared to a net loss of Rs.1362.31 lacs for the previous year.Material developments in Human Resources/ IndustrialRelations:The Company considers its human resources as amongst itsmost valuable assets. It has been Company's constantendeavour to impart requisite training and thereby develop andhone the skills and talent of its personnel. However, with anobjective of rationalizing the surplus manpower, the Companyhad during the previous year launched a Voluntary RetirementScheme for the employees to retain the viability andcompetitiveness of the Company and improve its efficiency.Pursuant to the scheme, overall 488 employees had opted forvoluntary retirement upto June, 2009.The overall Industrial Relations in the Company have beenquite peaceful and cordial.Cautionary Statement:Statements in the Management Discussion and Analysisdescribing Company's objective, projections, estimates andexpectations may be "forward looking statements" within themeaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied.Important factors that could make a difference to the Company'soperations include economic conditions affecting demand/ supplyand price conditions in the domestic and overseas markets inwhich the Company operates, changes in Governmentregulations, tax laws, statute and other incidental factors.

MANAGEMENT DISCUSSION AND ANALYSIS

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REPORT ON CORPORATE GOVERNANCE

Your Directors are pleased to submit their report on the Corporate Governance of the Company for the FinancialYear 2009-2010.

COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE:

Goldiam benchmarks its Corporate Governance with the application of sound management practices and it conforms tothe mandatory requirements. The Company is striving constantly to adopt the emerging good corporate governance practices.

MANAGEMENT DISCUSSION AND ANALYSIS:

This has been carried elsewhere in the Annual Report.

BOARD OF DIRECTORS:

Composition and Category of the Board of Directors as on 31st March, 2010 and the number of directorshipsand chairmanship/ membership of the Board Committees in other public limited companies:

The composition of the Board is in conformity with Clause 49 of the Listing Agreement with Stock Exchanges.

Name of Director Category No. of Directorships and CommitteeMemberships/ Chairmanship held in other

Public Limited Companies

Directorship Committee CommitteeChairmanship Membership

Mr. Manhar R. Bhansali Chairman, Promoter-Executive 3 nil nil

Mr. Rashesh M. Bhansali Promoter-Executive 3 nil nil

Mr. Rajesh G. Kapadia Independent-Non-Executive 8 4 3

Mr. Ajay M. Khatlawala Independent-Non-Executive nil nil nil

Dr. R. Srinivasan Independent-Non-Executive 7 4 4

Other directorships do not include directorships in Private Limited Companies, Foreign Companies and Companiesunder Section 25 of the Companies Act, 1956.

Chairmanship/ Membership of committees of Board of Directors include only Audit and Shareholders'/Investors'Grievance Committees of other Public Limited Companies.

BOARD MEETINGS HELD:

Five Board meetings were held during the financial year ended on 31st March, 2010. These were held on28th April, 2009, 26th June, 2009, 31st July, 2009, 30th October, 2009 and 29th January, 2010.

Attendance of each director at the Board meetings held during the financial year ended 31st March, 2010and the last AGM:

Director No. of Board No. of Board Last AGMmeetings held meetings attended YES/NO

Mr. Manhar R. Bhansali 5 4 YESMr. Rashesh M. Bhansali 5 5 YESMr. Rajesh G. Kapadia 5 5 YESMr. Ajay M. Khatlawala 5 4 YESDr. R. Srinivasan 5 3 YES

COMMITTEES OF THE BOARD:

A) AUDIT COMMITTEE:

The Audit Committee of the Company is constituted in line with the provisions of Clause 49 of the Listing Agreementwith the Stock Exchanges read with Section 292A of the Companies Act, 1956.

The terms of reference of the Audit Committee are broadly as under:

• Oversight of the company's financial reporting process and the disclosure of its financial information to ensurethat the financial statement is correct, sufficient and credible.

• Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal ofthe statutory auditor and the fixation of audit fees.

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• Approval of payment to statutory auditors for any other services rendered by the statutory auditors.• Reviewing, with the management, the annual financial statements before submission to the board for approval,

with particular reference to:a. Matters required to be included in the Director's Responsibility Statement to be included in the Board's

report in terms of clause (2AA) of section 217 of the Companies Act, 1956.b. Changes, if any, in accounting policies and practices and reasons for the same.c. Major accounting entries involving estimates based on the exercise of judgment by management.d. Significant adjustments made in the financial statements arising out of audit findings.e. Compliance with listing and other legal requirements relating to financial statements.f. Disclosure of any related party transactions.g. Qualifications in the draft audit report.

• Reviewing, with the management, the quarterly financial statements before submission to the board for approval.• Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal

control systems.• Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department,

staffing and seniority of the official heading the department, reporting structure coverage and frequency ofinternal audit.

• Discussion with internal auditors any significant findings and follow up there on.• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected

fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board.• Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as

post-audit discussion to ascertain any area of concern.• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders

(in case of non payment of declared dividends) and creditors.• Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance

function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate.• Reviewing the financial statements of the unlisted subsidiary companies.• The Audit Committee also reviews the following information:

a. Management discussion and analysis of financial condition and results of operations;b. Statement of significant related party transactions submitted by management;c. Management letters / letters of internal control weaknesses issued by the statutory auditors;d. Internal audit reports relating to internal control weaknesses; ande. The appointment, removal and terms of remuneration of the Chief internal auditor.

• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee

The Audit Committee met on 28th April, 2009, 26th June, 2009, 31st July, 2009, 30th October, 2009 and 29th January, 2010.The meeting held on 26th June, 2009 reviewed the Annual Accounts of the Company for the financial year 2008-2009and approved the same. The meetings held on 31st July, 2009, 30th October, 2009 and 29th January, 2010 reviewedand approved the results for 1st, 2nd and 3rd quarter respectively.

Composition and Attendance at the meetings of the Audit Committee:

Name of the Member Status No. of meetings attended

Mr. Rajesh G. Kapadia Chairman 5

Mr. Ajay M. Khatlawala Member 4

Dr. R. Srinivasan Member 3

B) SHARE TRANSFER COMMITTEE/ SHAREHOLDER/ INVESTOR GRIEVANCE COMMITTEE:

The Share Transfer Committee has been constituted under the chairmanship of Mr. Manhar R. Bhansali withMr. Rashesh M. Bhansali and Mr. Ajay M. Khatlawala as the other members to consider and approve transfer of sharesin physical form and other allied matters. The Shareholder/ Investor Grievance Committee has been constituted underthe chairmanship of Mr. Ajay M. Khatlawala with Mr. Manhar R. Bhansali and Mr. Rashesh M. Bhansali as members.

SHAREHOLDER/ INVESTOR SERVICE:

Shareholder/ Investor Service is handled by the Company Secretary who provides timely services. The Companyreceived 11 complaints during the year which were duly attended to and there was no case/ complaint unresolvedat the end of the year.

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NAME & DESIGNATION OF THE COMPLIANCE OFFICER:Ms. Rachana V. Vora, Company Secretary.

DETAILS OF REMUNERATION PAID TO THE DIRECTORS IN 2009-10: (Amount in Rupees)(a) Remuneration paid to Executive Directors:

Name Salary Bonus Other perks Commission Total

Mr. Manhar R. Bhansali nil nil nil nil nil

Mr. Rashesh M. Bhansali nil nil nil nil nil

(b) Remuneration paid to Non-Executive Directors:

Name Sitting Fees No. of Shares held

Mr. Rajesh G. Kapadia 75,000 2,000

Mr. Ajay M. Khatlawala 60,000 6,000

Dr. R. Srinivasan 45,000 nil

GENERAL BODY MEETINGS:

a) Location, date & time of the last three Annual General Meetings and the Special Resolutions passed thereat:

Financial Year Date & Time Location Special Resolution passed

2006-2007 05.09.2007 "ORCHID" Room, 2nd floor, Sunville Banquet No special resolution passed4.00 p.m. & Conference Rooms, 9, Annie Besant Road,

Worli, Mumbai 400 018

2007-2008 26.09.2008 'Tribune 1' Banquet Hall, 6th floor, Hotel No special resolution passed2.30 p.m. Tunga International, M.I.D.C. Central Road,

Andheri (East), Mumbai 400 093

2008-2009 25.09.2009 'Tribune 1' Banquet Hall, 6th floor, Hotel Tunga No special resolution passed2.30 p.m. International, M.I.D.C.Central Road,

Andheri (East), Mumbai 400 093

Extra-Ordinary General Meetings held during the preceding three years and the Special Resolutions passed thereat:

Financial Year Date & Time Location Special Resolution passed

2006-2007 24.04.2006 Walchand Hirachand Hall, i) Increase in the Authorised Share4.00 p.m. Indian Merchants' Chamber Bldg., Capital of the Company from

Churchgate, Mumbai 400 020 Rs.27,00,00,000/- toRs.31,00,00,000/- divided into3,10,00,000 equity shares ofRs.10/- each.

ii) Preferential allotment of 32,48,000Fully Convertible Warrantsrepresenting an equal number ofequity shares of Rs.10/- each.

b) Special Resolution passed through Postal Ballot:

No Special resolution was passed through Postal Ballot during 2009-2010.

SUBSIDIARIES:

Diagold Designs Limited and Goldiam Jewellery Limited, subsidiaries of the Company, are non-listed materialIndian subsidiaries in terms of Explanation 1 to Clause 49(III) of the Listing Agreement with the Stock Exchangeswith their respective turnovers exceeding 20% of the consolidated turnover of the holding company with all itssubsidiaries. Accordingly, in terms of Clause 49(III)(i) of the Listing Agreement, Mr. Ajay M. Khatlawala andMr. Rajesh G. Kapadia, Independent Directors on the Board of Directors of the Company, have been appointed onthe Board of Directors of Diagold Designs Limited and Goldiam Jewellery Limited respectively.

In terms of Clause 49 III of the Listing Agreement with the Stock Exchanges, the financial statements of the unlistedsubsidiary companies are reviewed quarterly by the Audit Committee and the minutes of the Board meetings of theunlisted subsidiary companies are regularly placed before the Company's Board of Directors.

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DISCLOSURES:None of the transactions with any of the related parties was in conflict with the interests of the Company at large.Attention of the Members is drawn to the transactions with the related parties set out in Notes on Accounts- Schedule14, Note No.3, forming part of the Annual Report.The Company's major related party transactions are generally with its Subsidiaries and Associates. The relatedparty transactions are entered into based on considerations of various business exigencies. All related partytransactions are negotiated on arms length basis and are only intended to further the interests of the Company.A statement in summary form of the transactions with related parties is periodically placed before the Audit Committeeas required under Clause 49 IV (A) of the Listing Agreement with the Stock Exchanges.The Company has complied with the requirements of the Stock Exchanges, Securities and Exchange Board ofIndia and other statutory authorities on all matters relating to capital markets during the last three years and nopenalties or strictures have been imposed on the Company by any Stock Exchange, Securities and ExchangeBoard of India or other statutory authorities.The non-mandatory requirements contained in Annexure 1D to Clause 49 of the Listing Agreement with the StockExchanges have not been adopted.

MEANS OF COMMUNICATION:The quarterly and annual financial results are sent to the Stock Exchanges immediately after they are approvedand taken on record by the Board of Directors. These financial results are normally published in the "Free PressJournal" and "Navshakti" and are also made available on the website of the Company, 'www.goldiam.com'.Annual Reports are despatched to all the shareholders. As per the requirements of the hitherto Clause 51 of theListing Agreement with the Stock Exchanges, the financial results, shareholding pattern etc. were also electronicallyfiled on the EDIFAR website 'www.sebiedifar.nic.in' within the timeframe prescribed in that regard. No presentationwas made to the institutional investors or analysts during the year.

GENERAL SHAREHOLDER INFORMATION:I. Annual General Meeting:

Date 12th August, 2010Time 3.00 p.m.Venue 'Tribune 1' Banquet Hall, 6th floor, Hotel Tunga International,

M.I.D.C. Central Road, Andheri (East), Mumbai 400 093.II. Financial Year: 1st April, 2009 to 31st March, 2010III. Date of Book Closure: 4th August, 2010 to 12th August, 2010 (both days inclusive).IV. Dividend Payment Date: On or after 13th August, 2010 (within the statutory time limit of 30 days),

subject to the shareholders' approval.V. Listing in Stock Exchanges: Bombay Stock Exchange Limited (BSE)

National Stock Exchange of India Limited (NSE)The Annual Listing Fees as applicable have been paid to the aboveStock Exchanges.

VI. Stock Codes: BSE - 526729, NSE - GOLDIAM EQ.VII. Market Price Data:

The High and Low Prices of the Company's share during each month in the financial year 2009-2010 are as below:Month Bombay Stock Exchange Limited National Stock Exchange of India Limited

High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)April, 2009 21.72 12.00 22.00 11.40May, 2009 26.35 16.25 26.10 16.25June, 2009 35.15 27.20 35.15 27.45July, 2009 37.90 23.25 38.25 23.75August, 2009 32.35 24.05 32.35 23.20September, 2009 32.80 28.00 32.70 27.75October, 2009 42.70 28.15 42.35 28.65November, 2009 36.75 33.00 36.40 33.00December, 2009 48.15 33.00 48.25 33.15January, 2010 52.35 42.60 52.00 42.45February, 2010 49.20 40.00 48.00 40.00March, 2010 50.40 43.15 50.45 43.15

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VIII. Performance:

Generally the share price movement is along the stock market trends and the market trend of the Jewellery Industry.

IX. Registrar and Transfer Agents (RTA):M/s. Link Intime India Pvt. Ltd.C-13, Pannalal Silk Mills Compound,LBS Marg, Bhandup (West), Mumbai - 400 078Tel no.: 25946970 Fax: 25946969e-mail: [email protected]

X. Share Transfer System:With a view to expedite the process of share transfer which are received in physical form, a Share TransferCommittee had been constituted which usually meets once in a fortnight to consider and approve the transfer,transmission, dematerialization, rematerialisation of shares etc. The transfers of physical shares are effectedby the Share Transfer Agents after approval by the Share Transfer Committee; provided the documents arecomplete in all respects and the share transfer is not under any dispute and the share certificates dulyendorsed are sent to the shareholders by them. The minutes of the meetings of the Share Transfer Committeeare placed at the Board Meeting.

The Company obtains from a Company Secretary in Practice half-yearly certificate of compliance with theshare transfer formalities as required under Clause 47(c) of the Listing Agreement with the Stock Exchangesand files a copy of the certificate with the Stock Exchanges.

XI. Distribution of Shareholding:Distribution of Shareholding as on 31st March, 2010:

Equity Number of Percentage of Number of Percentage ofShareholding Shareholders Shareholders Shares Shareholding

1 – 500 10068 83.43 1983975 7.96501 – 1000 963 7.98 793403 3.181001 – 2000 538 4.46 848616 3.402001 – 3000 148 1.22 392059 1.573001 – 4000 94 0.78 340774 1.374001 – 5000 58 0.48 277819 1.115001 – 10000 99 0.82 731468 2.9310001 & Above 100 0.83 19577882 78.48Total 12068 100.00 24945996 100.00

Shareholding Pattern as on 31st March, 2010:

Category Number of Shares Percentage

Shareholding of Promoters & Promoter Group 13548100 54.31

Public Shareholding

● Institutions

Mutual Funds/ UTI 8000 0.03

Financial Institutions/ Banks 400 0.00

● Non-Institutions

Bodies Corporate 803961 3.22

Individuals 6790277 27.22

Clearing Member 49052 0.20

Market Maker 23761 0.10

Foreign Nationals, NRIs, Foreign Companies, OCBs 3138522 12.58

Independent Directors 8000 0.03

HUF 574923 2.30

Trusts 1000 0.01

Total 24945996 100.00

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XII. Dematerialization of shares and liquidity:

The shares of the Company are traded compulsorily in the dematerialized form and connectivity has been establishedwith both the Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services(India) Limited (CDSL). As on 31st March, 2010, 24308079 equity shares, representing 97.44% of the Company’sshare capital, stood dematerialized. The International Securities Identification Number (ISIN) allotted to the sharesof the Company under the Depository System is INE025B01017.

XIII. Outstanding GDRs/ADRs/Warrants or any Convertible instruments, etc.:

As on date, the Company has not issued GDR/ADR/Warrants or any convertible instruments.

XIV. Plant Locations:

GOLDIAM INTERNATIONAL LIMITED, GEMS & JEWELLERY COMPLEX, SEEPZ (SEZ), ANDHERI (E),MUMBAI - 400 096.

XV. Address for Correspondence:

GOLDIAM INTERNATIONAL LIMITED, GEMS & JEWELLERY COMPLEX, SEEPZ (SEZ), ANDHERI (E),MUMBAI - 400 096

COMPLIANCE CERTIFICATE OF AUDITORS: Attached with this Report.

No qualification in Auditors’ Report.

CODE OF CONDUCT:

In accordance with Clause 49 sub-clause I(D)(ii) of the Listing Agreement with the Stock Exchanges,I, Mr. Rashesh M. Bhansali, in my capacity as the Managing Director of Goldiam International Limited, hereby confirmthat all members of the Board of Directors and Senior Management Personnel of the Company have affirmed theircompliance with the code of conduct of the Company in respect of the financial year 2009-2010.

For GOLDIAM INTERNATIONAL LIMITED

RASHESH M. BHANSALIMumbai: 30th May, 2010 Vice Chairman & Managing Director

To,The Members ofGoldiam International LimitedMumbai.

We have examined the compliance of conditions ofCorporate Governance by Goldiam International Limitedfor the year ended on March 31, 2010 as stipulated in clause49 of the Listing Agreement of the said Company with theStock Exchanges.

The Compliance of conditions of Corporate Governance isthe responsibility of the Management. Our examination waslimited to a review of the procedures and implementationthereof, adopted by the Company for ensuring thecompliance of the conditions of Corporate Governance asstipulated in the said clause. It is neither an audit nor anexpression of opinion on the financial statements of theCompany.

AUDITORS'’’’ CERTIFICATE ON CORPORATE GOVERNANCE

In our opinion and to the best of our information andaccording to the explanations given to us, we certify thatthe Company has complied with the conditions of theCorporate Governance as stipulated in the abovementioned Listing Agreement.

We further state that such compliance is neither anassurance as to the future viability of the Company nor theefficiency or effectiveness with which the Management hasconducted the affairs of the Company.

For Pulindra Patel & Co.Chartered Accountants

PULINDRA M. PATELProprietor

Place: Mumbai Membership No. 48991Date: 30th May, 2010 FRN No. 115187W

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AUDITORS'’ REPORTTO THE MEMBERS OF GOLDIAM INTERNATIONALLIMITED1. We have audited the attached Balance Sheet of GOLDIAM

INTERNATIONAL LIMITED as at 31st March, 2010 andalso the Profit and Loss Account of the Company for theyear ended on that date annexed thereto and Cash FlowStatement for the year ended on that date. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinionon these financial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material mis-statement. An auditincludes examining on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accounting principlesused and significant estimates made by management, aswell as evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order,2003 issued by the Central Government of India in termsof sub-section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above,we report that:a) We have obtained all the information and explanations

which to the best of our knowledge and belief werenecessary for the purpose of our audit;

b) In our opinion, proper books of accounts as requiredby law have been kept by the Company, so far as itappears from our examination of those books;

c) The Balance Sheet and Profit and Loss Account andCash Flow Statement dealt with by this report are inagreement with the books of account;

d) In our opinion, the Balance Sheet and Profit and LossAccount and Cash Flow Statement dealt with by thisreport comply with the mandatory accountingstandards referred to in sub-section (3C) of Section211 of the Companies Act, 1956.

e) On the basis of the written representations receivedfrom the directors, as on 31st March, 2010 andtaken on record by the Board of Directors, we reportthat none of the directors is disqualified as on31st March, 2010 from being appointed as director interms of clause (g) of sub-section 1 of Section 274 ofthe Companies Act, 1956.

f) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts read together with the Significant AccountingPolicies and notes thereon, give the informationrequired by the Companies Act, 1956 in themanner so required and give a true and fair view inconformity with the accounting principles generallyaccepted in India

i) in the case of Balance Sheet, of the state of affairsof the Company as at 31st March, 2010;

ii) in the case of Profit and Loss Account, of the profitof the Company for the year ended on that date;and

iii) in the case of Cash Flow Statement, of the cashflows of the Company for the year ended on thatdate.


(Pulindra Patel)Proprietor


Annexure(Referred to in 3rd paragraph of our report of even date)1. (a) The Company has maintained proper records showing

full particulars, including quantitative details andsituation of fixed assets.

(b) All fixed assets have been physically verified by themanagement in a phased periodical manner, which inour opinion, is reasonable having regard to the size ofthe Company and the nature of its assets. Accordingto the information and explanations given to us, nomaterial discrepancies were noticed on suchverification.

(c) There was no substantial disposal of fixed assetsduring the year and the going concern status of theCompany is not affected.

2. a) As explained to us, the management has conductedphysical verification of inventory at reasonableintervals.

b) In our opinion and according to the information &explanations given to us, the procedure of physicalverification of inventories followed by the managementis reasonable and adequate in relation to the size ofthe Company and the nature of its business.

c) In our opinion and according to the information &explanations given to us, the Company has maintainedproper records of inventory and no materialdiscrepancies were noticed on physical verification.

3. a) According to the information and explanations givento us, the company has granted loans to two partiesof which one is wholly owned subsidiary company,covered in the registered maintained under section301 of the Act. The maximum amount involved duringthe year was Rs. 193,991,393/- and year end balanceof the loans granted was Rs. 87,706,445/-.

b) In our opinion and according to the information andexplanations given to us, the rate of interest and otherterms and conditions for such loans are not prima facieprejudicial to the interest of the company.

c) In respect of loans granted, repayment of the principalamount is as stipulated and payment of interest hasbeen regular.

d) There is no overdue amount of loans granted tocompanies, listed in the register maintained undersection 301 of the Companies Act, 1956.

19


e) According to the information and explanations givento us, the Company has not taken unsecured loansfrom parties covered in the register maintained undersection 301 of the Companies Act, 1956. Accordingly,the provisions of Clauses (iii) (f) and (iii) (g) ofParagraph 4 of the Order are not applicable.

4. In our opinion and according to the information andexplanations given to us, there are adequate internalcontrols commensurate with the size of the Company andthe nature of its business, for the purchase of inventoryand fixed assets and for the sale of goods and services.During the course of our audit, no major weakness hasbeen noticed in the internal control system in respect ofthese areas.

5. In respect of the contracts or arrangements referred to insection 301 of the Companies Act, 1956:(a) In our opinion and according to the information and

explanations given to us, the transactions made inpursuance of contracts or arrangements, that need tobe entered in the Register maintained under section301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information andexplanations given to us, the transactions made inpursuance of such contracts or arrangementsexceeding value of Rupees five lakhs have beenentered into during the financial year at prices which

are reasonable having regard to the prevailing marketprice at the relevant time.

6. The Company has not accepted any deposits from the public.7. The Internal Audit of the company has been carried out by

an independent firm of Chartered Accountants. In ouropinion, the internal audit functions carried out have beencommensurate with the size and nature of its business.

8. We have been informed that the Central Government hasnot prescribed maintenance of cost records under section209(1) (d) of the Companies Act, 1956.

9. According to the information and explanations given to usand on the basis of the examination of the books of account,the Company has been regular in depositing undisputedstatutory dues including Provident Fund, InvestorEducation and Protection Fund, Employees’ StateInsurance, Income-tax, Sales-tax, Wealth tax, Service tax,Customs Duty, Excise Duty, cess and other statutory duesapplicable to it with the appropriate authorities. Accordingto the information and explanations given to us, noundisputed amounts payable in respect of Provident Fund,Investor Education and Protection Fund, Employees’ StateInsurance, Income tax, Sales tax, Wealth tax, Service tax,Customs Duty, Excise Duty, cess and other undisputedstatutory dues were outstanding, at the year end for aperiod of more than six months from the date they becamepayable.

According to the records of the Company, disputed Municipal Property Tax together with Penalty not deposited on account of dispute are as follows.

Name of Statute / Description Amount Rs. Period to which the amount relates Forum where dispute is pending

Property Tax 13,696,775/- 1997-98 Bombay High Court

10. The Company has no accumulated losses at the end ofthe financial year and it has not incurred any cash lossesin the current financial year and has incurred cash lossesin the immediately preceding financial year.

11. Based on our audit procedures and as per the informationand explanations given by the management, we areof the opinion that the Company has not defaultedin repayment of dues to banks. The Company does nothave any borrowings from financial institution or by wayof debentures.

12. According to the information and explanations given tous, the Company has not granted any loans and advanceson the basis of security by way of pledge of shares,debentures and other securities.

13. The Company is not a chit fund or a nidhi / mutual benefitfund / society. Therefore, the provisions of clause 4 (xiii)of the Companies (Auditor’s Report) Order, 2003(as amended) are not applicable to the Company.

14. In respect of dealing in shares, debentures, securities andother investments, in our opinion and according to theinformation and explanations given to us, proper recordshave been maintained of the transactions and contractsand timely entries have been made therein. The shares,securities, debentures and other investments have beenheld by the Company in its own name.

15. According to the information and explanations given tous, the Company had given guarantee for loan taken bysubsidiary / Joint venture from a bank; in our opinion theterms and conditions on which guarantee is given is notprima facie prejudicial to the interest of the Company.

16. The Company did not have any term loans outstandingduring the year.

17. We have been informed by the management that the fundsraised on short-term basis have not been used forlong-term investment, though surplus funds which werenot required for immediate utilisation have been gainfullyinvested in Shares, Mutual Fund,Liquid Fund andinvestments payable on demand.

18. The Company has not made any preferential allotment ofshares to parties or companies covered in the registermaintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures duringthe year.

20. The Company has not raised any money through a publicissue during the year.

21. Based upon the audit procedures performed for thepurpose of reporting the true and fair view of the financialstatements and as per the information and explanationsgiven by the management, we report that no fraud on orby the Company has been noticed or reported during thecourse of our audit.




20


BALANCE SHEET AS AT 31ST MARCH, 2010

Schedules referred to above form an integral part of Balance SheetAs per our report of even date.

For Pulindra Patel & Co. For and on behalf of the BoardChartered Accountants

Pulindra M. Patel Rachana V. Vora Manhar R. Bhansali Rashesh M. BhansaliProprietor Company Secretary Chairman & Mg. Director V. Chairman & Mg. DirectorMembership No. 048991

Place : Mumbai Place : MumbaiDate : 30th May, 2010 Date : 30th May, 2010

Schedule As at As atNo. 31.03.2010 31.03.2009

Rupees Rupees RupeesI) SOURCES OF FUNDS :

1) SHAREHOLDERS FUNDS :a) SHARE CAPITAL 1 249,459,960 255,459,960b) RESERVES AND SURPLUS 2 1,299,094,092 1,294,273,967

1,548,554,052 1,549,733,9272) LOAN FUNDS :

SECURED LOANS — —UNSECURED LOANS — —

— —

TOTAL Rs. 1,548,554,052 1,549,733,927

II) APPLICATION OF FUNDS :1) FIXED ASSETS

GROSS BLOCK 3 231,832,037 235,913,617LESS: DEPRECIATION 139,198,311 135,700,644

NET BLOCK 92,633,726 100,212,973

2) INVESTMENTS 4 898,368,264 617,639,4143) DEFERRED TAX ASSETS 13,484,468 4,923,481

(Refer Note No.22 of Schedule 14)

4) CURRENT ASSETS, LOANS AND 5ADVANCES :a) INVENTORIES 282,101,436 331,698,671b) SUNDRY DEBTORS 258,484,366 313,776,655c) CASH AND BANK BALANCES 26,808,582 108,441,672d) LOANS AND ADVANCES 135,109,143 245,782,696

702,503,527 999,699,695

5) LESS: CURRENT LIABILITIESAND PROVISIONS : 61) CURRENT LIABILITIES 124,512,103 198,318,4332) PROVISIONS 33,923,830 4,010,797

158,435,933 202,329,230

NET CURRENT ASSETS 544,067,594 797,370,4656) MISCELLANEOUS EXPENDITURE 7 — 29,587,594

(To the extent not written off or adjusted)(Refer Schedule 14 Note No. 1 (P))TOTAL Rs. 1,548,554,052 1,549,733,927

SIGNIFICANT ACCOUNTING POLICIES ANDNOTES ON ACCOUNTS 14

21


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010

Schedule For the year For the yearNo. ended ended

31.03.2010 31.03.2009Rupees Rupees

I) INCOME :SALES 8 593,516,933 559,396,944INCREASE/(DECREASE) IN STOCK 9 (9,266,237) (23,179,529)PROFIT ON SALE OF ASSETS 175,622 —OTHER INCOME 10 82,016,063 59,651,861

TOTAL Rs. 666,442,381 595,869,276

II) EXPENDITURE :COST OF MATERIALS 11 355,487,905 373,560,893PURCHASE FOR TRADING 79,472,059 95,992,242MANUFACTURING AND OTHER EXPENSES 12 170,080,284 246,673,051INTEREST & FINANCE CHARGES 13 2,067,718 1,406,968DEPRECIATION, AMORTISATION AND IMPAIRMENT 3 12,257,422 16,344,981LOSS ON SALE OF ASSETS — 1,382,223

TOTAL Rs. 619,365,387 735,360,357

III) PROFIT :PROFIT/ (LOSS) BEFORE TAX 47,076,994 (139,491,081)

PROVISION FOR TAX :– CURRENT TAX 6,381,925 140,000– DEFERRED TAX ASSET 8,560,987 3,988,079– FRINGE BENEFIT TAX — 628,939– SHORT / EXCESS PROVISION FOR TAX 1,867,361 40,865

PROFIT/ (LOSS) AFTER TAX 51,123,417 (136,231,076)BALANCE BROUGHT FORWARD 715,683,485 851,914,561

PROFIT AVAILABLE FOR APPROPRIATION 766,806,902 715,683,485

APPROPRIATION :PROPOSED DIVIDEND 24,945,996 —PROVISION FOR TAX ON PROPOSED DIVIDEND 4,143,280 —BALANCE CARRIED FORWARD TOBALANCE SHEET 737,717,626 715,683,485

TOTAL Rs. 766,806,902 715,683,485

EARNING PER SHARE (Face Value Rs.10/-)Basic 2.05 (5.33)Diluted 2.01 (5.24)(Refer Note No.8 of Schedule 14)

SIGNIFICANT ACCOUNTING POLICIES ANDNOTES ON ACCOUNTS 14

Schedules referred to above form an integral part of Profit & Loss AccountAs per our report of even date.




22


CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2010PARTICULARS 2009-10 2008-09

Rupees Rupees Rupees

A) CASH FLOW FROM OPERATING ACTIVITIES :NET PROFIT/(LOSS) BEFORE TAX AND EXTRAORDINARY ITEMS 47,076,994 (139,491,081)ADJUSTMENT FOR :Depreciation (Schedule 3) 12,257,422 16,344,981Profit/Loss on sale of Investment (Net) (16,496,758) (553,619)Interest (15,261,847) (28,705,817)Revaluation Loss on Investments (10,608,997) 9,147,087Profit / Loss on Sale of Assets (175,622) 1,439,092Dividend (15,606,231) (19,103,697)Voluntary Retirement expenses written off 50,067,841 7,396,898(Short)/Excess Provision for taxation written off 1,867,361 40,865

6,043,170 (13,994,209)

OPERATING PROFIT/(LOSS) BEFOREWORKING CAPITAL CHANGES 53,120,164 (153,485,290)ADJUSTMENT FOR :Trade and other Receivable 168,215,488 425,209,516Inventories 49,597,235 77,864,341Trade Payable (73,806,330) (7,058,532)

144,006,393 496,015,324

CASH GENERATED FROM OPERATIONS 197,126,557 342,530,034Interest Paid (2,067,718) (1,406,968)Direct Tax Paid (4,635,186) (7,375,863)Voluntary Retirement Scheme expenses (20,480,247) (36,984,492)

(27,183,151) (45,767,323)

CASH FLOW BEFORE EXTRAORDINARY ITEMS 169,943,406 296,762,711

NET CASH FROM OPERATING ACTIVITIES 169,943,406 296,762,711

B) CASH FLOW FROM INVESTING ACTIVITIES :Purchase of Fixed Assets (7,286,442) (216,038)Sale of Fixed Assets 2,783,889 6,259,916Purchase of Investments (2,304,653,916) (1,299,462,507)Purchase of Investments in Subsidiary (5,199,090) (7,200,000)Sale of Investments 2,056,229,911 1,095,112,036Interest received 14,156,937 27,570,972Dividend received 15,606,231 19,103,697

NET CASH USED IN INVESTING ACTIVITIES (228,362,480) (158,831,924)

C) CASH FLOW FROM FINANCING ACTIVITIES :Proceeds from Issue of Share Capital includingshare premium amount (23,214,016) (59,295,674)Repayment of Long Term Borrowing — (49,947,940)

NET CASH USED IN FINANCING ACTIVITIES (23,214,016) (109,243,614)

NET INCREASE IN CASH AND CASH EQUIVALENTS (81,633,090) 28,687,172CASH AND CASH EQUIVALENTS AS AT 01.04.2009 108,441,672 79,754,500CASH AND CASH EQUIVALENTS AS AT 31.03.2010 26,808,582 108,441,672

As per our report of even date.




23


As at As at31.03.2010 31.03.2009

Rupees Rupees RupeesSCHEDULE “1”SHARE CAPITAL :AUTHORISED CAPITAL31000000 Equity Shares of Rs. 10/- each 310,000,000 310,000,000

310,000,000 310,000,000

Issued Capital24945996 Equity Shares of Rs.10/- each 249,459,960 255,459,960(Previous Year 25545996 Equity Shares of Rs.10/- each)

249,459,960 255,459,960

Subscribed and Paid up Capital24945996 Equity Shares of Rs.10/- each 249,459,960 255,459,960(Previous year 25545996 Equity Shares of Rs.10/- each)1) Out of which 2,25,24,600 Equity Shares of Rs.10/- each

allotted as fully paid up by way of Bonus Sharescapitalised from security premium & reserves & surplus.

2) During the year under review, the company bought backfrom the open market through stock exchanges 600000(Previous Year 1486804) Equity Shares of Rs.10/- eachand paid Rs.23,214,016/- (Previous Year Rs.44,427,634/-)by way of Premium and the same including face value ofshares bought back has been debited to share premiumand general reserve account.TOTAL Rs. 249,459,960 255,459,960

SCHEDULE “2”RESERVES AND SURPLUS

1. Capital Redemption Reserve :As per last Balance Sheet 14,868,040 —Add : Transfer from Security Premium andGeneral Reserves 6,000,000 14,868,040

20,868,040 14,868,0402. Security Premium :

As per last Balance Sheet 15,354,326 74,650,000Less: Utilised during the year for buy-back of shares 11,816,296 44,427,634Less: Transfer to Capital Redemption Reserve 3,538,030 14,868,040(See Schedule 14 Note No. 27)

— 15,354,3263. Capital Reserve Account

As per last Balance Sheet 47,970,000 47,970,0004. General Reserve

As per last Balance Sheet 500,398,116 500,398,116Less: Utilised during the year for buy-back of shares 5,397,720 —Less: Transfer to Capital Redemption Reserve 2,461,970 —(See Schedule 14 Note No. 27)

492,538,426 500,398,1165. Profit & Loss Account 737,717,626 715,683,485

TOTAL Rs. 1,299,094,092 1,294,273,967

SCHEDULES

24


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25


SCHEDULE “4” No. of Face As at No. of As atINVESTMENTS : Shares Value 31.03.2010 Shares 31.03.2009


A. LONG TERM INVESTMENTS

TRADE:

In Equity Shares of Subsidiary Company -Unquoted, fully paid up

1. Diagold Designs Limited 2039658 10 46,839,389 1,999,665 41,640,299

2. Goldiam Jewels Limited 1516500 10 31,501,250 1,516,500 31,501,250

3. Goldiam Jewellery Limited 1000000 10 10,000,000 1,000,000 10,000,000

4. Goldiam USA, Inc. (Face value of US$ 0.01/-each) 200 7,200,000 200 7,200,000

5. Goldiam HK Limited (Face value of HK$ 1/-each) — — 5,982,725 32,778,408(upto 22.07.2009)

In Equity Shares of Joint Venture Company -Unquoted, fully paid up

1. Goldiam HK Limited (Face value of HK$ 1/-each) 5982725 32,778,408(from 23.07.2009)

OTHER THAN TRADE:

In Equity Shares - Unquoted, fully paid up

1. Gujarat Pipavav Ports Limited 51500 10 51,500 51,500 51,500

2. Sip Technologies Limited 1891 10 18,910 1,891 18,910

In Units of Mutual Fund, fully paid up No. of Units No. of Units1) J.M.Core 11 Fund Series 1 Dividend Option 1000000 10 8,450,800 1,000,000 8,450,800

2) Kshitij Venture Capital Fund 30000 1000 30,000,000 30,000 30,000,000

In Debentures - Unquoted, fully paid up No. of No. ofDebentures Debentures

Barclays Investments & Loans (India) Ltd. Sr-115 BR NCD(*) 34 1000000 34,000,000 — —

Barclays Investments & Loans (India) Ltd. Sr-121 BR NCD(*) 25 1000000 25,000,000 — —

Morgan Stanley India Capital Pvt. Ltd. Sr-4 BR NCD (*) 50 1000000 50,000,000 — —



Prakausali Investments (India) Pvt. Ltd. 12.75% NCD (*) 20 1000000 20,000,000 — —

TOTAL Rs. 321,090,257 161,641,167

B. CURRENT INVESTMENTS

OTHER THAN TRADE:

In Equity Shares - Quoted, fully paid up No. of Shares No. of Shares

1) Classic Diamonds (I) Limited (Face value split to Rs 2) 5 2 102 1 8

2) Reliable Ventures Limited 50000 10 1,165,000 50,000 684,000

3) Ruby Mills Limited — — — 826 233,304

4) S B & T International Limited 1 10 10 1 7

5) Shrenuj & Co Limited (Face value split to Rs 2) 5 2 74 1 70

6) Suashish Diamonds Limited 1 10 69 1 69

7) Suraj Diamonds & Jewellery Limited 1 10 43 1 21

8) Titan Industries Limited 1 10 257 1 257

In Redeemable Preference Shares - Unquoted, fully paid

K.S.Realty Construction Private Limited 2750 10 27,500 2,750 27,500


Jayneer Capital Private Limited 13% NCD(*) 3 50000 15,204,135 — —

K.S.Realty Construction Private Limited — — — 50 50,000,000

Morgan Stanley India Capital Private Limited Sr-3 BR NCD(*) 50 1000000 50,000,000 — —

26


No. of Face As at No. of As atUnits Value 31.03.2010 Units 31.03.2009

Rupees Rupees RupeesIn Debentures - Quoted, fully paid upKotak Nifty Link Debentures Type II — — — 4 10,000,000In Units of Mutual Fund -UNQUOTED1) Kotak Alternate Opportunities (India) Fund 17,443,125 11,750,0002) Bharti AXA Equity Fund Eco Plan - Growth 37762 10 658,725 — —3) Bharti AXA Treasury Advantage Fund -

Institutional Plan - Daily Dividend 40000 1000 40,000,000 — —4) Birla Sun Life Dynamic Bond Fund -

Retail - Quarterly Dividend — — — 481817 5,146,1565) Birla Sun Life Income Plus - Quarterly Dividend — — — 835967 9,349,3676) Birla Sun Life MIP II - Savings 5 - Growth 923462 10 15,000,000 — —7) BSL Medium Term Plan - Institutional -

Weekly Dividend - Reinvest 4032726 10 40,433,592 — —8) DWS Twin Advantage Fund - Growth 1981519 10 30,000,000 — —9) Fortis FTP Ser 12 Plan B Institutional Growth — 10 — 1000000 10,000,000

(Old Name ABN Amro FTP Ser 12 Plan B Inst Growth)10) Fortis Flexi Debt Fund - Regular - Quarterly Dividend — 10 — 880441 8,804,41211) Fortis Money Plus Inst. Weekly Dividend Reinvest — 10 — 2519896 25,198,96312) Fortis Money Plus Institutional Daily Dividend Reinvest 10227761 10 102,309,319 — —13) ICICI Prudential Flexible Income Plan

Weekly Dividend Reinvest 10 10532464 111,029,01914) ICICI Prudential Flexible Income Plan Weekly

Dividend Reinvest 386623 100 40,771,720 — —15) ICICI Prudential Inst. Income Plan - Quarterly Dividend — 10 — 4906733 56,185,03316) ICICI Prudential Inst. Short Term Plan - DR - Fortnightly — 10 — 846955 10,142,20417) ICICI Prudential Inst. Short Term Plan - DR- Monthly — 10 — 4999209 59,811,03418) Kotak FMP 13 Months Series 6 Growth 2000000 10 20,000,000 — —19) Kotak Floater Long Term - Daily Dividend 21912 10 220,873 — —20) Kotak Quarterly Interval Plan Series 1 - Dividend 3000000 10 30,000,000 — —21) Reliance Income Fund - Retail Plan -

Quarterly Dividend Plan — 10 — 2872263 37,316,73222) Tata Floater Fund - Daily Dividend 1504106 10 15,094,606 — —23) Templeton India Income Opportunities Fund - Growth 3000000 10 30,000,000 — —24) Templeton Floating Rate Income Fund Long Term Plan 12885061 10 128,948,859 5029593 50,320,094

Super Institutional - Daily Dividend Reinvest

TOTAL Rs. 577,278,008 455,998,247

Note (*) : (NCD refers to Non Convertible Debentures)

TOTAL Rs. 898,368,264 617,639,414

Aggregate Book Value of all quoted Investments 503,495,224 62,578,017Market Value of all quoted Investments 501,220,435 60,917,735Aggregate Book Value of all unquoted Investments 395,314,217 556,721,679

NOTES:(1) The following investments have been purchased and

sold during the year.

NAME OF THE MUTUAL FUNDSParticulars Face Value No. of Units Amount in Rs.BIRLA SUN LIFE SAVINGS FUND - INSTITUTIONAL - DAILY DIVIDEND - REINVESTMENT 10 2999475.736 30,015,154BIRLA SUN LIFE SAVINGS FUND - RETAIL - WEEKLY DIVIDEND - REINVESTMENT 10 1514033.703 15,154,053CANARA ROBECO SHORT TERM - INSTITUTIONAL - MONTHLY DIVIDEND FUND 10 1486685.924 15,103,811DSP BLACK ROCK FLOATING RATE FUND - REGULAR PLAN-WEEKLY DIVIDEND 10 2006530.534 20,150,271FORTIS FLEXI DEBT FUND - REGULAR PLAN A GROWTH 10 2802140.836 30,000,000FORTIS MONEY PLUS INSTITUTIONAL - GROWTH 10 14064072.956 190,000,000FORTIS MONEY PLUS INSTITUTIONAL - WEEKLY DIVIDEND 10 2497303.792 24,993,884HDFC SHORT TERM PLAN - DIVIDEND PAYOUT 10 954626.598 10,000,000

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Particulars Face Value No. of Units Amount in Rs.

HDFC CASH MANAGEMENT FUND-TREASURY ADVANTAGE PLAN-WHOLESALE-DAILY DIVIDEND REINVEST 10 2504451.185 25,123,402HDFC CASH MANAGEMENT FUND - TREASURY ADVANTAGE PLAN-WHOLESALE-WEEKLY DIVIDEND 10 4493469.573 45,040,405HDFC CASH MANAGEMENT FUND - TREASURY ADVANTAGE PLAN-RETAIL-WEEKLY DIVIDEND-REINVEST 10 993241.071 9,957,568ICICI PRUDENTIAL INSTITUTIONAL SHORT TERM PLAN-MONTHLY DIVIDEND REINVEST 10 25515.826 309,951ICICI PRUDENTIAL INSTITUTIONAL SHORT TERM PLAN - GROWTH 10 15210937.213 284,777,212ICICI PRUDENTIAL INSTITUTIONAL SHORT TERM PLAN-FORTNIGHTLY DIVIDEND REINVESTMENT 10 7481244.858 90,507,831ICICI PRUDENTIAL FLEXIBLE INCOME PLAN PREMIUM - WEEKLY DIVIDEND 10 17,431,990.696 183,877,386ICICI PRUDENTIAL FLEXIBLE INCOME PLAN PREMIUM - WEEKLY DIVIDEND 100 94868.830 10,006,062KOTAK FLOATER LONG TERM - DAILY DIVIDEND 10 122708.601 1,236,878TEMPLETON FLOATING RATE INCOME FUNDLONG TERM PLAN SUPER INST- DD REINVEST 10 17,609,119.942 176,203,898TEMPLETON INDIA SHORT TERM INCOME -RETAIL PLAN-WEEKLY DIVIDEND REINVEST 10 28083.808 30,182,722TEMPLETON INDIA ULTRA SHORT BOND FUNDRETAIL PLAN- DAILY DIVIDEND REINVEST 10 1004068.711 10,051,330TATA FLOATER FUND - DAILY DIVIDEND 10 3030699.156 30,414,884RELIANCE MONEY MANAGER FUND -INSTITUTIONAL OPTION-WEEKLY DIVIDEND PLAN 10 39068.991 39,135,355RELIANCE MONEY MANAGER FUND-INSTITUTIONAL OPTION-DAILY DIVIDEND PLAN 10 25022.782 25,051,220

NAME OF THE COMPANYParticulars Face Value No. of Shares Amount in Rs.APOLLO TYRES LIMITED 1 20000 1,027,392ASHOK LEYLAND LIMITED 1 25000 1,370,083AUTO LINE INDUSTRIES LIMITED 10 5000 716,367DISH TV INDIA LIMITED 1 10000 461,700ECLERK SERVICES LIMITED 10 1000 446,565EXIDE INDUSTRIES LIMITED 1 1000 1,225,031GUJARAT MINERAL DEVELOPMENT CORPORATION LIMITED 2 2000 358,900HINDALCO INDUSTRIES LIMITED 1 10000 1,314,215HINDUSTAN OIL EXPLORATION CO. LIMITED 10 1000 309,760HINDUSTAN ORGANIC CHEMICALS LIMITED 10 10000 566,400JK TYRE & INDUSTRIES LIMITED 10 10000 1,444,767J M FINANCIAL LIMITED 1 20300 1,025,238LAXMI VILLA BANK LIMITED 10 15911 1,359,660MRF LIMITED 10 250 1,578,938NHPC LIMITED 10 101471 3,652,956RALLIS INDIA LIMITED 10 740 719,574S.KUMARS NATIONWIDE LIMITED 10 25000 1,231,250SPICEJET LIMITED 10 30000 1,074,750UB ENGINEERING LIMITED 10 30707 3,960,651VIP INDUSTRIES LIMITED 10 5000 895,000VOLTAS LIMITED 1 15000 2,360,850

SCHEDULE “5” As at As at31.03.2010 31.03.2009

CURRENT ASSETS, LOANS AND ADVANCES Rupees Rupees Rupees

1) CURRENT ASSETS :a) INVENTORIES :

Stock of Consumable Stores& Spare parts (at cost) 1,434,857 1,630,063Raw Materials 221,439,261 261,575,053(At cost or net realisable value whichever is less)Finished Goods (at cost or net realisable value 59,227,318 68,493,555whichever is less)TOTAL Rs. 282,101,436 331,698,671

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SCHEDULE “5” contd. As at As at31.03.2010 31.03.2009

Rupees Rupees Rupeesb) SUNDRY DEBTORS :

(Unsecured)Outstanding for a period exceeding six months– Considered good 51,677,416 267,742,497– Considered doubtful — —Other Debts– Considered good 206,806,950 46,034,158– Considered doubtful — —

258,484,366 313,776,655TOTAL Rs.

c) CASH AND BANK BALANCES :Cash on Hand 775,605 1,763,507Balance with Banks in– Current Account 9,066,151 60,408,034– EEFC Account 16,903,362 46,270,131– Fixed Deposit with Banks 63,464 —

TOTAL Rs. 26,808,582 108,441,672

II) LOANS AND ADVANCES :(Considered good except where provided for)Loans and Advances 111,259,773 221,418,433Advance tax paid (net of provision) 21,795,480 21,802,230Security & Other Deposits 2,053,890 2,562,033

135,109,143 245,782,696

TOTAL Rs. 702,503,527 999,699,695

SCHEDULE “6”CURRENT LIABILITIES & PROVISIONS :

CURRENT LIABILITIES :Sundry Creditors :Dues to Micro, Small and Medium Enterprises 120,124 118,168Others 122,050,408 189,657,077Advance from Customers 2,341,571 8,543,188

124,512,103 198,318,433PROVISIONS :Proposed Dividend 24,945,996 —Provision for Tax on Proposed Dividend 4,143,280 —Provision for Current Tax 4,691,129 3,870,797Provision for Wealth Tax 143,425 140,000

33,923,830 4,010,797

TOTAL Rs. 158,435,933 202,329,230

SCHEDULE “7”MISCELLANEOUS EXPENDITURE :(To the extent not written off or adjusted)Voluntary Retirement Scheme expenses 29,587,594 36,984,492Add : Addition during the year 20,480,247 —

50,067,841 36,984,492Less : written off during the year 50,067,841 7,396,898

— 29,587,594

— 29,587,594

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SCHEDULE “8” For the For theyear ended year ended31.03.2010 31.03.2009

SALES Rupees Rupees Rupees

EXPORT SALES 521,833,471 481,173,475

LOCAL SALES 71,751,666 78,317,183

593,585,137 559,490,658LESS : VAT 68,204 93,714

593,516,933 559,396,944

TOTAL Rs. 593,516,933 559,396,944

SCHEDULE “9”INCREASE/DECREASE IN STOCK :Closing Stocks - Finished Goods 59,227,318 68,493,555

Opening Stocks - Finished Goods 68,493,555 91,673,084

TOTAL Rs. (9,266,237) (23,179,529)

SCHEDULE “10”OTHER INCOME :Debit / Credit Balance written off 17,689,056 2,134,714

Dividend on Units of Mutual Funds 15,604,219 18,911,310

Profit on Sale of Investments (net) 16,496,758 553,619

Dividend on Shares 2,012 192,387

Miscellaneous Income 6,779 653,591

Interest received (TDS Rs.2,313,793/- Previous Year Rs.4,653,756/-) 17,329,564 30,112,785

Rent Income (TDS Rs.2,828,525/- Previous Year Rs.1,576,758/-) 14,555,625 6,958,333

Consultancy Charges (TDS Rs.36,625/- Previous Year Rs.Nil) 332,050 —

Exchange Difference EEFC A/c — 135,124

TOTAL Rs. 82,016,063 59,651,861

SCHEDULE “11”COST OF MATERIALS :Opening Stock 261,575,053 315,584,548

Add: Purchases (Net of Exchange gain of Rs.11,108,130/- 315,352,113 319,551,398

Previous Year loss of Rs.4,524,672/-)576,927,166 635,135,946

Less : Closing Stock 221,439,261 261,575,053

TOTAL Rs. 355,487,905 373,560,893

SCHEDULE “12”MANUFACTURING AND OTHER EXPENSES :MANUFACTURING EXPENSES :Stores & Spares 2,945,179 4,503,655

Power & Water 4,756,377 6,613,247

Repairs & Maintenance (Building) 185,284 661,204

Machinery & Electrical Repairs 300,429 404,763

Grooving Charges 390,365 472,384

Insurance (Building) 63,882 145,519

Others 3,930,561 896,770

12,572,077 13,697,543

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SCHEDULE “12” contd. For the For theyear ended year ended31.03.2010 31.03.2009

Rupees RupeesWAGES, SALARIES AND OTHER BENEFITS :

Salaries, Wages, Bonus & Ex-gratia 8,727,112 53,214,376

Contribution to E.S.I.C. 199,202 1,221,306

Contribution to Provident Fund 462,871 3,081,092

Voluntary Retirement Scheme expenses written off 50,067,841 7,396,898

Contribution to Group Gratuity Scheme 1,336,754 3,045,815

Contribution to life cover premium under Group Gratuity Scheme 18,260 56,213

Workmen & Staff Welfare expenses 564,113 1,206,262

61,376,153 69,221,963OTHER EXPENSES :

Insurance Charges 181,036 385,770

Exchange Difference 54,427,433 116,827,042

Rent, Rates & Taxes 1,719,407 3,933,257

Repairs & Maintenance others 1,103,371 1,597,532

Commission on Sales 10,459,973 7,532,214

Advertisement 440,291 1,012,107

Travelling and Conveyance 1,851,036 4,197,206

Telephone Charges 657,546 1,384,355

Printing & Stationery 668,969 866,121

Auditors’ Remuneration 162,000 205,652

Donation 25,000 25,501

Vehicle expenses 1,065,819 1,344,058

Portfolio Management Fees 34,000 1,024,440

Security Transaction Tax 131,291 181,665

Bad Debts 15,156,208 —

Revaluation Loss on Investments 441,176 9,147,087

ECGC Premium 3,309,101 1,863,600

Share Buy Back expenses 990,169 1,120,872

General expenses 3,308,229 11,105,069

96,132,054 163,753,545

TOTAL Rs. 170,080,284 246,673,051

SCHEDULE “13”INTEREST & FINANCE CHARGES

Bank Charges 1,978,398 1,165,416

Interest on Bank Loan 89,320 241,552

TOTAL Rs. 2,067,718 1,406,968

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SCHEDULE 14NOTES ATTACHED TO AND FORMING PART OF THE ACCOUNTS

1 SIGNIFICANT ACCOUNTING POLICIES:A) BASIS OF PREPARATION OF ACCOUNTS :

The financial statements have been prepared and presented under historical cost convention on the accrual basisof accounting and comply with the Accounting Standards as specified in the Companies (Accounting Standard)Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI), the relevant provisionsof the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India, to the extentapplicable. The financial statements have been prepared under historical cost convention on an accrual basisexcept in case of assets for which provision for impairment is made. Accounting policies have been consistentlyapplied by the Company and are consistent with those used in the previous year.

B) USE OF ESTIMATES :The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities at the date of financial statements and reported amounts of revenue and expensesfor the year. Although these estimates are based upon management’s best knowledge of current events andactions, actual result could differ from these estimates.

C) FIXED ASSETS:Fixed Assets are stated at cost (Net of VAT wherever applicable) less accumulated depreciation and impairments,if any. They are stated at historical cost.

D) IMPAIRMENT OF ASSETS :i) At each Balance sheet date, the Company determines whether a provision should be made for impairment

loss on fixed assets by considering the indications that an impairment loss may have occurred in accordancewith Accounting Standard (AS)-28 “Impairment of Assets”.

ii) After Impairment, depreciation is provided on the revised carrying amount of the assets.iii) A previously recognized impairment loss is increased or reversed depending on changes in circumstances.

However, the carrying value after reversal is not increased beyond the carrying value that would have prevailedby charging usual depreciation if no impairment loss had been recognized.

E) DEPRECIATION:Depreciation on Fixed Assets is provided on “Written Down Value” method and at the rates prescribed in Schedule XIVof the Companies Act, 1956. Depreciation on addition to fixed assets is provided on prorata basis from the date ofacquisition or installation. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto thedate on which the said asset is sold, discarded, demolished or scrapped.

F) INVESTMENTS:i) Investments that are intended to be held for more than a year from the date of acquisition and those having fixed

maturity period of more than a year are classified as long-term Investments and are stated at cost. Provision fordiminution in value of long-term investments are made, if the diminution in value is other than temporary.

ii) Current investments are valued at cost or market value, whichever is lower, on scrip wise basis. Cost isdetermined on First In First Out (FIFO) basis.

iii) Reclassification of investments are made at the lower of cost and fair value at the date of transfer whereveravailable.

G) INVENTORIES:i) Raw materials are valued at cost or net realisable value, whichever is lower on first in first out basis.ii) Stores and Spares are valued at cost on first in first out basis.iii) Cost of finished goods comprises of direct material, conversion cost and all other cost incurred in bringing

material to its present location and are valued at cost or net realisable value whichever is lower.Trading goods are valued at cost or net realisable value, whichever is lower.

H) FOREIGN CURRENCY TRANSACTIONS:a) Investment in foreign subsidiaries and Joint venture are recorded at the exchange rate prevailing on the date

of making the investment.b) Monetary Assets (including bank account maintained in foreign currency) except those which are covered by

forward exchange contracts and monetary liabilities, i.e. items to be received or paid in foreign currency, arestated at the exchange rates prevailing on the date of Balance Sheet. In case of transactions which arecovered by forward exchange contracts, the difference between the forward rate and the spot rate is recognisedas income or expense over the life of contracts. Realised gains and losses on foreign currency transactionsare recognised in the Profit & Loss Account.

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c) Transactions in foreign currencies current assets (including bank account maintained in foreign currency) andcurrent liabilities (including bank loans taken in foreign currency), i.e. items to be received or paid in foreigncurrency, are stated at the exchange rates prevailing on the date of the Balance Sheet. Gains and losses onforeign currency transactions incurred to acquire fixed assets are adjusted to the carrying cost of such fixedassets.

d) Monetary items which are covered by forward exchange contracts, the difference between the year endrate and rate on the date of the contract is recognised as exchange difference and is recognised over thelife of the contract.

e) The Company uses foreign exchange forward contracts and options to hedge its exposure to movements inforeign exchange rates. These foreign exchange forward contracts and options are not used for trading orspeculation purpose. Any profit or loss arising on cancellation or renewal of forward foreign exchange contractsis recognised as income or expense for the year. In respect of foreign currency option contracts which areentered into to hedge highly probable forecasted transactions, the cost of these contracts, if any, is expensedover the period of the contract. Any profit or loss arising on settlement or cancellation of currency options isrecognised as income or expense for the period in which settlement or cancellation takes place. The effect ofthese currency option contracts outstanding at the year-end, in the form of unrealised gains/losses, isrecognised.

I) RECOGNITION OF INCOME AND EXPENDITURE :Revenues/Incomes and Costs/Expenditures are generally accounted on accrual basis as they are earned orincurred.SALES :Revenue is recognised when the significant risks and rewards of ownership to the goods is passed to the buyer.Domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basisof dates of Airway Bills. Domestic sales are disclosed net of Value Added Tax and returns as applicable.DIVIDEND :Revenue is recognised when the right to receive is established.INTEREST:Interest income is recognised on a time proportion basis taking into account the amount outstanding and therate applicable.

J) EMPLOYEE BENEFITS :a) Defined Contribution Plan :

Employee benefits in the form of contribution to Provident Fund managed by Government authorities, EmployeesState Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and thecontributions are charged to the Profit and Loss Account of the year when the contributions to the respectivefunds are due.

b) Defined Benefit Plan :Retirement benefits in the form of Gratuity benefit is considered as defined benefit obligation and is providedfor on the basis of an actuarial valuation.Gratuity :The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees.The plan provides for payment to vested employees at retirement/death while in employment or on terminationof employment of an amount based on the respective employee’s salary and the tenure of employment.Vesting occurs upon completion of given years of service. The company makes payment to group gratuitypolicy issued by Life Insurance Corporation of India.

K) RESEARCH AND DEVELOPMENT EXPENDITURE:Revenue expenses on Research & Development are charged to the Profit & Loss Account in the year in whichthese are incurred. Capital expenditure is taken as addition to the fixed assets.

L) EARNING PER SHAREBasic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, the net profit or loss attributable to equity shareholders and theweighted average number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares.

M) PROVISION FOR CURRENT AND DEFERRED TAX :Tax expense comprising of Current, deferred tax and fringe benefit taxes :Income Tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with theIncome tax law) and deferred tax charge or credit.Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxableincome for the period. The deferred tax charge or credit and corresponding deferred tax liabilities or assets are

33


recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date.Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realisedin future; however where there is unabsorbed depreciation or carry forward losses, deferred tax assets arerecognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed ateach balance sheet date and are written-down or written-up to reflect the amount that is reasonably / virtuallycertain (as the case may be) to be realised.Provision for Fringe Benefit tax for the year has been determined in accordance with the provision ofsection 115WC of the Income Tax Act, 1961.

N) SEGMENT REPORTING :Identification of Segment :The Company has identified Two Reportable Segments viz. Jewellery Manufacturing and Investment Activity.Segments have been identified and reported taking into account nature of products and services, the differentrisks and returns and the internal business reporting systems.The Company has two business segments viz. Jewellery Manufacturing, and Investment Activity.

O) PROVISIONS/ CONTINGENCIES :A Provision is created when an enterprise has a present obligation as a result of past event that probably requiresan outflow of resources and a reliable estimate can be made of the amount and it is probable that an outflow ofresources will be required to settle the obligation. A disclosure for contingent liability is made when there is apossible obligation or a present obligation that may, but probably will not, require an outflow of resources.When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resourcesis remote, no provision or disclosure is made.The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisabilityof such assets. However, if it has become virtually certain that an inflow of economic benefits will arise, assetsand related income is recognised in the financial statements of the period in which the change occurs.

P) MISCELLANEOUS EXPENDITURES :Expenses included under the head “Miscellaneous Expenditure” are Voluntary Retirement payments. A VoluntaryRetirement Scheme was announced in the last quarter of the previous year. In accordance with the transitionalprovision contained in Accounting Standard 15, the company has chosen to amortize such expenses in equalquarterly installments over a period ending on 31st March, 2010.

2 CONTINGENT LIABILITIES NOT PROVIDED FORa) The Company has outstanding performance guarantee of Rs.10,019,250/- as on the Balance Sheet date, executed

in favour of Deputy Commissioner of Customs (Previous year Rs.10,019,250/-)

b) The Municipal Corporation of Greater Mumbai has preferred an appeal in the High Court of Judicature at Bombayagainst the order of Small Causes Court rejecting the claim of Municipal Corporation of Greater Mumbai for anamount of Rs.13,696,775/- (Previous year Rs. 13,696,775/-) on account of property tax.

c) The Company had executed Bank Guarantee of US Dollar Nil (Previous year US Dollar 4,000,000) favouringThe Hongkong & Shanghai Banking Corporation Limited, Hong Kong for its Subsidiary/Joint VentureGoldiam HK Limited, Hong Kong.

d) Commitment under contribution agreement with Kotak Alternate Opportunities (India) Fund is Rs.6,250,000/-(Previous Year Rs.13,250,000/-)

3 Estimated amount of Contracts remaining to be executed on Capital Account and not provided for is Rs.nil.(Previous year Rs.nil.)

4 Details of Related parties transactions are as under.

a) List of related parties and relationship where control exists or with whom transactions were entered into:

Sr. No. Relationship Name of the Related Party

1 Subsidiaries Diagold Designs LimitedGoldiam Jewellery LimitedGoldiam Jewels LimitedGoldiam HK Limited (upto 22.07.2009)Goldiam USA, Inc.

2 Associates Goldiam HK Limited (from 23.07.2009)Temple Designs LLP

3 Key Management Personnel Mr. Manhar R. Bhansali (Chairman & Managing Director)Mr. Rashesh M. Bhansali (Vice Chairman & Managing Director)

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b) Transactions during the year with related parties: (Amount in Rupees)

Sr. Nature of Transaction Subsidiaries Associate/No. Joint Venture

2009-10 2008-09 2009-10 2008-09

i) Interest received 7,285,773 12,911,498 620,810 —ii) Loans given 45,095,819 4,750,000 — —iii) Loans refunded 140,073,851 50,600,000 — —iv) Guarantee given — 8,000,000 — —v) Purchase of Investments 5,199,090 7,200,000 — —vi) Sale of Machinery — — 45,000 —vii) Sale of goods 86,157,133 88,953,396 4,301,778 —viii) Purchase of goods 77,045,220 115,995,280 1,023,413 —I) Outstanding Loan

given as on 31st March 75,046,481 193,991,393 12,659,964 —II) Outstanding Guarantee

given as on 31st March — 16,000,000 — —III) Outstanding Receivables

as on 31st March 16,079,654 47,220,067 4,140,472 —IV) Outstanding Payables

as on 31st March 27,827,630 11,666,287 — —

c) Disclosure in respect of Transactions with related parties during the year (Amount in Rupees)

Sr. Nature of Transaction Subsidiaries Associate/No. Joint Venture

Goldiam Diagold Goldiam Goldiam Goldiam Temple GoldiamJewellery Designs HK Jewels USA, Designs UK

Limited Limited Limited Limited Inc. LLP Limited(upto (from

22.07.2009) 23.07.2009)

i) Interest received 6,323,975 — 961,798 — — — 620,810(10,343,618) — (2,567,880) — — — —

ii) Loans given 45,095,819 — — — — — — (4,750,000) — — — — — —

iii) Loans refunded 140,073,851 — — — — — —(50,600,000) — — — — — —

iv) Guarantee given — — — — — — —— (8,000,000) — — — — —

v) Purchase of Investments — 5,199,090 — — — — —— — — — (7,200,000) — —

vi) Sale of Machinery — — — — — 45,000 —— — — — — — —

vii) Sale of goods 66,325,061 — 116,234 — 19,715,838 — 4,301,778(50,982,828) — (6,266,091) — (31,704,477) — —

viii) Purchase of goods — 11,047,405 2,420,366 48,096,504 15,480,945 — 1,023,413— (118,908) (106,206,837) (7,598,509) (2,071,026) — —

I) Outstanding Loan given 75,046,481 — — — — — 12,659,964as on 31st March (170,024,513) — (23,966,880) — — — —

II) Outstanding Guarantee — — — — — — —given as on 31st March — — (16,000,000) — — — —

III) Outstanding Receivables 3,215,205 — — — 12,864,449 — 4,140,472as on 31st March (28,776,355) — (136,536) — (18,307,176) — —

IV) Outstanding Payables — 19,318 — 14,216,187 13,592,125 — —as on 31st March — (118,908) (2,292,505) (7,598,509) (1,656,365) — —

5 IN THE OPINION OF THE DIRECTORS:a) The Current Assets and Loans & Advances are approximately of the value stated, if realised in the ordinary

course of business.b) The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably necessary.

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6 PARTICULARS IN RESPECT OF LICENSED CAPACITY, INSTALLED CAPACITY AND ACTUAL PRODUCTION

CLASS OF GOODS LICENSED CAPACITY INSTALLED CAPACITY ACTUAL PRODUCTIONMANUFACTURED Unit 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

JEWELLERY Kgs N. A. N.A. N. A. N. A. 156.91 172.44

7 Amounts due from Subsidiaries & Associates included under Loans and Advances, Receivables & Payables are as follows :

Particulars As at 31.03.2010 As at 31.03.2009Loans and Advances : (Amount in Rupees)Goldiam Jewellery Limited 75,046,481 170,024,513(Maximum balance outstanding during the year (Rs. 170,024,513/-)Goldiam HK Limited (subsidiary upto 22.07.2009 and Joint Venture thereafter) 12,659,964 23,966,880(Maximum balance outstanding during the year (Rs.23,966,880/-)Receivables :Goldiam HK Limited (subsidiary upto 22.07.2009 and Joint Venture thereafter) 4,140,472 136,536Goldiam Jewellery Limited 3,215,205 28,776,355Goldiam USA, Inc. 12,864,449 18,307,176Payables :Goldiam HK Limited (subsidiary upto 22.07.2009 and Joint Venture thereafter) — 2,292,505Goldiam Jewels Limited 14,216,187 7,598,509Goldiam USA, Inc. 13,592,125 1,656,365Diagold Designs Limited 19,318 118,908

8 EARNING PER SHARE :PARTICULARS 2009-10 2008-09Profit / (Loss) after Tax 51,123,417 (136,231,076)Weighted Average No. of shares + potential shares outstanding 25444093 26003736Earning per share (Basic) 2.05 (5.33)Earning per share (Diluted) 2.01 (5.24)

9 JOINT VENTURE :In compliance with the Accounting Standard relating to “Financial Reporting of interest in Joint Venture’ (AS-27),issued by the Institute of Chartered Accountants of India, the Company has interests in the following jointly controlledentity, which is incorporated outside India.Name of the Company Incorporated For the Period For the Period

in ended ended31.03.2010 31.03.2009

(in percentage) (in percentage)Goldiam HK Limited (from 23.07.2009) Hong Kong 49.93% N.A.

For the Period For the PeriodGoldiam HK Limited ended ended

31.03.2010 31.03.2009Rupees Rupees

Proportionate Reserves and Surplus as at the beginning of the year N.A. —Proportionate Transfer to Reserves — —Proportionate surplus / (deficit) in Profit and Loss Account (8,903,394) —(net of transfer to reserves, dividend etc.)Proportionate Reserves and Surplus as at the end of the year (10,255,654) —

As on 31.03.2010 For the Period Ended 31.03.2010Name of the Company & Percentage of Assets Liabilities Income ExpenditureCountry of Incorporation Shareholding

% Rupees Rupees Rupees Rupees

Goldiam HK Limited 49.93% 58,104,476 22,940,160 63,855,047 72,758,442Hong Kong

The above figures have been taken from audited accounts of Joint Venture as on 31st March, 2010 and converted atthe exchange rate prevailing as on the date of Balance Sheet of Joint Venture.Contingent liability in respect of Joint Venture is Rs. Nil.

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10 DETAILS OF DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES :As at As at

31.03.2010 31.03.2009Rupees Rupees

(i) The principal amount and the interest due thereon (to be shown separately)remaining unpaid to any supplier as at the end of each accounting year. 120,124 118,168

(ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro,Small and Medium Enterprises Development Act, 2006 along with the amountsof the payment made to the supplier beyond the appointed day during eachaccounting year. Nil Nil

(iii) The amount of interest due and payable for the period of delay in makingpayment (which have been paid but beyond the appointed day during the year)but without adding the interest specified under Micro, Small and MediumEnterprises Development Act, 2006. Nil Nil

(iv) The amount of interest accrued and remaining unpaid at the end of eachaccounting year. Nil Nil

(v) The amount of further interest remaining due and payable even in thesucceeding year, until such date when the interest dues as above are actuallypaid to the small enterprise for the purpose of disallowance as a deductibleexpenditure under section 23 of the Micro, Small and Medium Enterprises Nil NilDevelopment Act, 2006

11 GENERAL DESCRIPTION OF DEFINED BENEFIT PLAN:GRATUITY :The Company makes annual contribution to the Employees’ Group Gratuity-cum-Life Assurance Scheme of the LifeInsurance Corporation of India, a funded benefit plan for qualifying employees. The scheme provides for lump sumpayment to vested employees at retirement/death while in employment or on termination of employment of an amountequivalent to 15 days service for each completed year of service or part thereof depending on the date of joining.The benefit vests after five years of continuous service.

Assumptions Gratuity GratuityFunded Funded

31.03.2010 31.03.2009Rupees Rupees

Reconciliation of opening and closing balances of the present value of thedefined benefit obligation:Present Value of obligation as at beginning of year 3,902,150 3,509,392Current service cost 303,908 303,908Interest cost 312,172 280,751Actuarial (gain) / loss 5,240,656 7,950,784Benefits paid (9,581,047) (8,142,685)

Present Value of obligation as at end of the year 177,839 3,902,150

Change in Plan assetsPlan assets at period beginning, at fair value 3,923,370 8,414,689Expected return on plan assets 84,211 599,281Actuarial (gain) / loss — —Contribution 5,828,671 3,045,815Benefits paid (9,581,047) (8,142,685)

Plan assets at period end 2010, at fair value 255,205 3,917,100Fair Value of Plan AssetsFair Value of plan assets at beginning of year 3,923,370 8,414,689Actual return on plan assets 84,211 599,281Contributions 5,828,671 3,045,815Benefits paid (9,581,047) (8,412,685)Fair Value of plan assets at the end of year 255,205 3,902,150Funded status 77,366 (14,950)

Excess of Actual over estimated return NIL NIL

37


The Amounts to be recognized in the balance sheet and statements of profit and lossPresent value of obligations as at the end of year 177,839 3,917,100Fair value of plan assets as at the end of the year 255,205 3,902,150Funded status 177,839 (14,950)Net asset/(liability) recognized in balance sheet 77,366 (14,950)Expenses for the yearCurrent service cost 303,908 303,908Interest cost on benefit obligation 312,172 280,751Expected return on plan assets (84,211) (599,281)Net actuarial (gain)/loss recognised in the year 5,240,656 7,950,784Total Expenses recognised in the Profit and Loss Account 5,772,525 7,936,162(The above figures includes Rs. 42,85,529/- debited to VoluntaryRetirement Scheme written off)

Assumptions 31.03.2010 31.03.2009Gratuity Gratuity

Discount Rate 8.0% 8.0%Employee Turnover 4.0% 4.0%

Mortality 1994-96 LIC Mortality Table (Std)

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotionand other relevant factors, such as supply and demand in the employment market.(I) Amounts recognised as an expense:(i) Defined Benefit Plan :

Gratuity includes gratuity cost of Rs. 1,336,754/- (Previous Year Rs.3,045,815/-).Leave Encashment Rs. 96,525/- (Previous Year Rs. 14,71,119/-).

(ii) Defined Contribution Plan :Contribution to Provident Fund is Rs.462,871/- (Previous Year Rs. 30,81,092/-), ESIC and Labour Welfare Fundincludes Rs.199,202/- (Previous Year Rs. 12,21,306/-).

12 MANAGERIAL REMUNERATION :a) During the year Company has paid Managerial Remuneration of Rs.Nil/- and sitting fees of Rs.1,80,000/-

(Previous Year Rs.Nil/-as Managerial Remuneration and sitting fees of Rs.1,80,000/-)

b) Details of payment made to the Managing Directors and Directors. (Amount in Rupees)

PARTICULARS MANAGING OTHER TOTAL TOTALDIRECTORS DIRECTORS 2009-10 2008-09

i) Salaries Nil — Nil —ii) Perquisites Nil — Nil —iii) Bonus Nil — Nil —iv) Commission Nil — Nil —v) Sitting Fees Nil 180,000 180,000 180,000

TOTAL Rs. Nil 180,000 180,000 180,000

Assumptions Gratuity GratuityFunded Funded

31.03.2010 31.03.2009Rupees Rupees

38


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6,81

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221,

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4,61

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——

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(1,5

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(166

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GO

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——

——

——

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—(1

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(8,9

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——

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7,72

4,30

4—

79,4

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——

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5,37

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(24,

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6.91

508,

378,

583

13.1

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(14.

75)

(66,

703,

234)

——

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(444

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)(9

.90)

(60,

769,

251)

TOTA

L (B

+C)

—68

,493

,555

——

——

—59

3,51

6,93

3—

59,2

27,3

18—

(91,

673,

084)

——

——

—(5

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96,9

44)

—(6

8,49

3,55

5)

40


14 DETAILS OF RAW MATERIAL CONSUMED:JEWELLERY DIVISION : Quantity Value (in Rupees)Gold (Grams) 61,553.93 93,445,680

(86,294.10) (100,935,305)Platinum (Grams) 1,369.76 2,710,514

(1288.74) (1,519,863)Gold Findings (Grams) 2,383.78 1,066,465

(2,275.98) (4,705,059)Cut & Polished Diamonds (Carats) 20,420.32 195,348,413

(24,230.37) (253,492,209)Color Stones (Carats) 142.14 54,906

(3,476.84) (1,002,311)Alloy (Grams) 66,799.90 341,657

(165,900.00) (1,124,139)GOLD MOUNTINGS (Grams) — —

(38.80) (60,800)SILVER MODELS (Grams) 10,534.43 1,467,305

(15,723.31) (710,399)SILVER FINDINGS (Grams) 2,533.44 237,426

(1.54) (83)SEMI FINISHED JEWELLERY (Grams) 12,368.75 58,218,306

(1,718.24) (8,219,242)15 VALUE OF IMPORTS ON C.I.F. BASIS :

PARTICULARS 2009-10 2008-09Rupees Rupees

1 Raw Materials 169,979,301 254,146,9882 Consumable Stores 2,186,147 2,986,0453 Capital Goods — —

16 (A) EXPENDITURE IN FOREIGN CURRENCY : Rupees RupeesForeign Travels 732,000 2,572,275Investment in Subsidiary — 7,200,000Other Expenses 82,496 1,277,000

(B) REMITTANCE IN FOREIGN EXCHANGE CURRENCY :ON ACCOUNT OF DIVIDEND:Year to which Dividend Relates 2009-10 2008-09Net Dividend Nil Nil

17 EARNINGS IN FOREIGN EXCHANGE: Rupees RupeesF.O.B.Value of Exports 515,607,572 479,961,758

18 Value of imported raw materials consumed and the value of all indigenous raw materials similarly consumed andthe percentage of each to the total consumption.

Particulars Amount in Rupees Percentage2009-10 2008-09 2009-10 2008-09

1 Raw MaterialsA Imported 146,440,817 195,803,184 41.19% 52.42%B Indigenous 209,047,088 177,757,709 58.81% 47.58%

2 Consumable Stores & SparesA Imported 2,388,350 3,096,275 81.09% 68.75%B Indigenous 556,829 1,407,380 18.91% 31.25%

19 FINANCIAL INSTRUMENTS / FORWARD CONTRACTS :The Company has entered into following forward / derivative instruments :The Company is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flows denominatedin foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established riskmanagement policies including the use of derivatives. The Company enters into forward exchange and option contracts,where the counterparty is bank. The forward contract or option are not used for trading or speculation purpose.Outstanding Forward Contract for hedging currency risk against Export Receivables and Balance with Banks inEEFC accounts entered into by the company as on 31st March, 2010 is US$ Nil (Previous year US$ 5.7 million)equivalent to Rs. Nil (Previous year Rs. 24.16 Crores) and for Import Payables and Bank Borrowings outstandingForward Contract entered into by the company as on 31st March, 2010 is US$ Nil (Previous year US$ 1.00 million)equivalent to Rs. Nil (Previous year Rs. 5.19 Crores).In respect of derivatives contract relating only to the Company's own export and imports business and foreign currencydebt obligations, in accordance with the principles of prudence and other applicable guidelines as per

41


Accounting Standards read with Schedule VI of the Companies Act, 1956, the Company has charged Rs. 5.20 Crores(Previous year Rs. 12.03 Crores) in Profit and Loss Account in respect of outstanding contracts as at31st March, 2010 (31st March, 2009). No such contracts were outstanding as on 31st March, 2010.Unhedged foreign currency exposure :PARTICULARS 31.03.2010 31.03.2009

in millions in Lakhs in millions in LakhsOutstanding Receivables & Loan US$ 2.919 Rs.2,722.81 US$ 0.420 Rs.167.87Outstanding creditors for goods and spares. US$ 2.579 Rs.1,197.20 US$ 0.312 Rs.160.19Exchange Earner's Foreign Currency a/c with Banks US$ 0.371 Rs.167.53 US$ 0.939 Rs.462.13Exchange Earner's Foreign Currency a/c with Banks Euro 0.001 Rs.0.51 Euro 0.001 Rs.0.57

20 Information given in accordance with the requirements of AS 17 on “Segment Reporting” .The Company has identified Two Reportable Segments viz. Jewellery Manufacturing and Investment Activity.Segments have been identified and reported taking into account nature of products and services, the different risksand returns and the internal business reporting systems.a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the

segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment onreasonable basis have been disclosed as “Unallocable”.

b) Segment Assets and Segment Liabilities represents assets and liabilities in respective segments. Tax relatedassets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have beendisclosed as “Unallocable”.

(i) Primary Segment Information : (Amount in Rupees)Year to 31.03.2010

JEWELLERY INVESTMENT OTHERS TOTALACTIVITY (Unallocated)

Segment Revenue 626,276,065 49,432,553 — 675,708,618Segment Results 2,657,631 49,220,830 — 51,878,461Less: unallocated expenses netof unallocated (income) — — (2,733,749) (2,733,749)Interest expenses (Net) — — — 2,067,718Profit before tax — — — 47,076,994Depreciation and Amortisation — — — 12,257,422Non cash expenses other thanDepreciation and Amortisation — — — —Segment Assets 887,435,477 779,324,922 40,229,586 1,706,989,985Segment Liabilities 124,512,103 — 33,923,830 158,435,933(excluding Shareholders’ Funds)

Year to 31.03.2009JEWELLERY INVESTMENT OTHERS TOTAL

ACTIVITY (Unallocated)Segment Revenue 569,278,705 40,623,013 — 609,901,718Segment Results (174,059,443) 39,082,377 — (134,977,066)Less: unallocated expenses netof unallocated (income) — — (3,107,047) (3,107,047)Interest expenses (Net) — — — 1,406,968Profit before tax — — — (139,491,081)Depreciation and Amortisation — — — 16,344,981Non cash expenses other thanDepreciation and Amortisation — — — —Segment Assets 897,533,516 711,576,893 142,952,747 1,752,063,157Segment Liabilities 198,318,433 — 4,010,797 202,329,230(excluding Shareholders’ Funds)The Company has identified Geographic Segments as its Secondary Segment. Secondary segmental reporting isbased on the geographical location of the customers. The geographical segments have been disclosed on revenueswithin India (Sales to customers in India) and revenues outside India (Sales to customers outside India).

(ii) Secondary Segment Information :PARTICULARS 2009-10 (Rs.) 2008-09 (Rs.)

1. Segment Results :Within India 1,819,708 (16,604,912)Exports outside India 837,923 (157,454,532)

Total Revenue 2,657,631 (174,059,443)

42


2. Segment Assets : As at 31.03.2010 (Rs.) As at 31.03.2009 (Rs.)Within India 47,329,106 48,438,340Exports outside India 840,106,371 849,095,176

Total Assets 887,435,477 897,533,516

3. Segment Liabilities :Within India — 1,529,160Exports outside India 124,512,103 196,789,273

Total Liabilities 124,512,103 198,318,433

21 CASH AND BANK BALANCE :Balances with non scheduled banks in Current Accounts and EEFC account :

Closing Balance Maximum BalanceRupees Rupees

31.03.2010 31.03.2009 31.03.2010 31.03.2009Citi bank N.A. — 194,922 194,922 194,922

22 The Deferred Tax Assets comprise of the following :As at As at

31.03.2010 31.03.2009Rupees Rupees

Deferred Tax Assets related to Fixed Assets 1,520,355 877,077Deferred Tax Assets related to Carried Forward Depreciation — 3,381,076Deferred Tax Assets related to Defined Benefits & Leave Salary 11,964,113 665,328

23 Salaries & wages includes directors remuneration of Rs.Nil. (Previous Year Rs. Nil)

24 Remuneration to Auditors:Particulars 2009-10 (Rs.) 2008-09 (Rs.)As Auditors 152,000 167,656Tax Audit Fees 10,000 11,030Others — 26,966

Total Rs. 162,000 205,652

25 Sales include Exchange Gain of Rs.65,93,091/- (Previous Year Exchange Loss of Rs.6,420/-)

26 Purchase Trading Goods include Exchange Gain/Loss of Rs.Nil (Previous Year Exchange Loss of Rs.1,76,16,465/-)

27 Pursuant to the approval of the Board of Directors under section 77A of the Companies Act, 1956 to buy-back equityshares of the Company at a price not exceeding Rs.50/- per equity share from the open market through Stock Exchangesfor an aggregate amount not exceeding Rs.5.25 crores being 3.53% of the aggregate of the Company's total paid-upequity share capital and free reserves as on March 31, 2009, the Company has bought back 600,000 equity shares fora total consideration of approximately Rs.2.32 Crores (excluding Brokerage, STT and other charges) by utilising theGeneral Reserve account and Securities Premium account.

28 A Voluntary Retirement Scheme was announced in the last quarter of the previous year. Total Payments madepursuant to the scheme aggregate to Rs. 57,464,739/-. In accordance with the transitional provision contained inAccounting Standard 15, the company has chosen to amortize such expenses in equal quarterly installments over aperiod ending on 31st March, 2010. A sum of Rs. 50,067,841/- (Previous year Rs. 73,96,898/-)has been charged toprofit and loss account in the current year.

29 Previous Year figures have been rearranged or re-grouped, wherever necessary.

Signatures to the Schedules 1 to 14 forming part of the Balance Sheet and Profit and Loss Account.

As per our report of even date.For Pulindra Patel & Co. For and on behalf of the BoardChartered Accountants

Pulindra M. Patel Rachana V. Vora Manhar R. Bhansali Rashesh M. BhansaliProprietor Company Secretary Chairman & Mg.Director V.Chairman & Mg.DirectorMembership No. 048991


43


BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

1. Registration Details :

Registration No. 4 1 2 0 3 State Code 1 1

Balance Sheet Date 3 1 0 3 2 0 1 0

2. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Bonus Issue

N I L N I L

3. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

1 5 4 8 5 5 4 1 5 4 8 5 5 4

SOURCES OF FUNDS

Paid-up Capital Reserves & Surplus

2 4 9 4 6 0 1 2 9 9 0 9 4

Secured Loans Unsecured Loans

N I L N I L

Deferred Tax Liability

N I L

APPLICATION OF FUNDS

Net Fixed Assets Investments

9 2 6 3 4 8 9 8 3 6 8

Net Current Assets Miscellaneous Expenditure

5 4 4 0 6 8 N I L

Deferred assets Accumulated losses

1 3 4 8 4 N I L

4. Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

5 9 3 5 1 7 5 4 6 4 4 0

Profit before tax Profit after Tax

4 7 0 7 7 5 1 1 2 3

Earning Per Share in Rs. Dividend Rate %

2 . 0 5 1 0

5. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS

a) Item Code : 7 1 1 3 . 1 9 J E W E L L E R Y

44


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

RELATING TO SUBSIDIARY COMPANY

Name of the subsidiary company : Diagold Goldiam Goldiam Goldiam Goldiam OOODesigns Jewels Jewellery HK USA, TiaraLimited Limited Limited Limited Inc. Jewels@

(upto22.07.2009)*#

The financial year of : 31st March, 31st March, 31st March, 31st March, 31st March, 31st March,the subsidiary ending on 2010 2010 2010 2010 2010 2010

a) Number of shares in the : 2039658 1516500 1000000 5982725 200 N.A.subsidiary company held by Eq.Shares Eq Shares Eq. Shares Eq. Shares Eq.SharesGoldiam International Limited of Rs.10/- of Rs.10/- of Rs.10/- of HKD.1/- of US$ 0.01

each. each. each. each. each.

b) Extent of interest of : 50.99% 50.55% 100% 50.275% 100% 51.00%^

HoldingCompany at the endof the financial year of theSubsidiary Company.

The net aggregate of profits lesslosses of the subsidiary companyso far as it concerns membershipof Goldiam International Limited

1) Not dealt with in the account ofGoldiam International Limitedamounted to

a) for the subsidiary’s financialyear (Amount in Rupees) (10,649,708) (1,397,068) 57,562,373 (1,579,214) (3,882,616) 89,985

b) for the previous financialyear of the subsidiarysince it became subsidiary(Amount in Rupees) 59,543,616 (2,417,944) 179,869,919 (469,044) (4,595,895) (23,818)

2) Dealt with in the account ofGoldiam International Limitedamounted to :

a) for the subsidiary’s financialyear (Amount in Rupees) Nil N.A. N.A. N.A. N.A. N.A.

b) for previous financialyear of the subsidiary Nil N.A. N.A. N.A. N.A. N.A.since it became subsidiary(Amount in Rupees)

* Subsidiary till 22.07.2009 and became Joint Venture thereafter.

# Financial information is based on unaudited results.

@ Subsidiary of Diagold Designs Limited

^ Held by subsidiary Diagold Designs Limited


MANHAR R. BHANSALI RASHESH M. BHANSALIChairman & Managing Director Vice Chairman & Managing Director

AUDITORS' REPORT

ON CONSOLIDATED FINANCIAL STATEMENTSTO THE BOARD OF DIRECTORS

1. We have audited the attached Consolidated BalanceSheet of GOLDIAM INTERNATIONAL LIMITED("the Company"), its subsidiaries and Joint Ventures("the Group") as at 31st March, 2010, the ConsolidatedProfit and Loss Account of the Company for the yearended on that date annexed thereto and ConsolidatedCash Flow Statement for the year ended on that date.The Consolidated Financial Statements includejointly controlled entity accounted in accordancewith Accounting Standard on Financial Reportingof Interests in Joint Ventures (AS-27). These financialstatements are the responsibility of the Company'smanagement. Our responsibility is to express an opinionon these financial statements based on our audit.

2. We have conducted our audit in accordance with thegenerally accepted auditing standards in India.These Standards require that we plan and performthe audit to obtain reasonable assurance whether thefinancial statements are prepared, in all materialrespects, in accordance with an identified financialreporting framework and free of materialmis-statement. An audit includes, examining on a testbasis, evidence supporting the amounts anddisclosures in the financial statements. An auditincludes assessing the accounting principles used andsignificant estimates made by management, as wellas evaluating the overall financial statements.We believe that our audit provides a reasonable basisfor our opinion.

3. The financial statements of two subsidiaries and aJoint Venture with total assets (net) Rs. 78,696,765/- Croresas at 31st March, 2010 and total revenue ofRs.311,235,626/- and cash flow amounting to(Rs. 3,455,779/-) for the year ended on that date havebeen audited/reviewed by other auditors whosereports have been furnished to us and our opinion,in so far as it relates to the amounts included in respectof these subsidiaries & Joint Venture, is based solelyon the reports of the other auditors.

4. The financial statement of Joint Venture of one of thesubsidiary is consolidated based on the unauditedaccounts furnished to us, having assets (net)Rs. 885,630/- and net loss of Rs. 48,500/- as on

30th September, 2009 . The Consolidated financialstatements have been prepared by usingproportionate consolidation as is required by theAccounting Standard 27, Financial Reporting Interestsin Joint Venture, issued by the Institute of CharteredAccountants of India.

5 We report that the consolidated financial statementshave been prepared by the Company in accordancewith the requirements of Accounting Standards onConsolidated Financial Statements (AS-21), andFinancial Reporting of Interest in Joint Venture(AS-27), issued by the Institute of CharteredAccountants of India and on the basis of the separateaudited financial statements of the Company and itssubsidiaries and audited Consolidated financialstatements of Subsidiary included in the consolidatedfinancial statements.

6. Based on our audit and consideration of reports ofother auditors on separate financial statements of thesubsidiaries, unaudited accounts of Joint Venture ofthe subsidiary and to the best of our information andaccording to the explanations given to us, we are ofthe opinion that the aforesaid consolidated financialstatements read together with our comments inparagraph 4 & 5 above give true and fair view inconformity with the accounting principles generallyaccepted in India:

i) in the case of the Consolidated Balance Sheet,of the consolidated state of affairs of the Groupas at 31st March, 2010;

i) in the case of the Consolidated Profit andLoss Account, of the consolidated profit of theGroup for the year ended on that date and

ii) in the case of the Consolidated Cash FlowStatement, of the consolidated cash flows of theGroup for the year ended on that date.


PULINDRA M. PATELPlace: Mumbai ProprietorDate: 30th May, 2010 Membership No. 48991

FRN No.115987W

45


46


Schedule As at As at No. 31.03.2010 31.03.2009


1) SHAREHOLDERS FUNDS :a) SHARE CAPITAL 1 249,459,960 255,459,960b) RESERVES AND SURPLUS 2 1,563,348,893 1,532,817,257

1,812,808,853 1,788,277,2172) MINORITY INTEREST 150,218,825 194,612,820

3) LOAN FUNDS :SECURED LOANS 3 245,546,214 306,832,059UNSECURED LOANS 4 68,586,604 113,361,265

314,132,818 420,193,323

TOTAL Rs. 2,277,160,496 2,403,083,360

II) APPLICATION OF FUNDS :1) FIXED ASSETS 5

GROSS BLOCK 396,126,464 445,716,967LESS: DEPRECIATION 200,868,610 207,743,517

NET BLOCK 195,257,855 237,973,4502) INVESTMENTS 6 770,049,218 494,519,4573) DEFERRED TAX ASSETS 15,807,755 6,570,500

(Refer Note No.17 of Schedule 16)

4) CURRENT ASSETS, LOANS AND 7ADVANCES :a) INVENTORIES 861,866,046 765,030,560b) SUNDRY DEBTORS 765,940,010 1,165,590,852c) CASH AND BANK BALANCES 92,866,123 160,135,843d) LOANS AND ADVANCES 77,291,329 77,258,088

1,797,963,509 2,168,015,343

5) LESS: CURRENT LIABILITIESAND PROVISIONS : 81) CURRENT LIABILITIES 469,785,687 539,408,9132) PROVISIONS 34,286,750 4,186,473

504,072,437 543,595,386

NET CURRENT ASSETS 1,293,891,071 1,624,419,9576) MISC. EXPENDITURE 9 2,154,597 39,599,995

(To the extent not written off or adjusted)(Refer Schedule 16 Note No. 1 D (xiii))TOTAL Rs. 2,277,160,496 2,403,083,360

SIGNIFICANT ACCOUNTING POLICIES & NOTESTO THE CONSOLIDATED FINANCIAL STATEMENTS 16

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010

Schedules referred to above form an integral part of the Consolidated Financial Statements.As per our report of even date.




47


CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010Schedule For the year For the year

No. ended ended 31.03.2010 31.03.2009

Rupees RupeesI) INCOME :

SALES 10 1,787,113,992 2,128,225,520INCREASE/DECREASE IN STOCK 11 45,431,371 36,586,055OTHER INCOME 12 75,446,456 48,856,597TOTAL Rs. 1,907,991,819 2,213,668,172

II) EXPENDITURE :RAW MATERIALS CONSUMED 13 1,290,251,331 1,592,845,866PURCHASE TRADING 130,491,951 115,075,931MANUFACTURING AND OTHER EXPENSES 14 364,645,968 494,250,305INTEREST AND FINANCE CHARGES 15 36,164,499 31,233,948PRELIMINARY EXPENSES 9 1,244,877 1,244,877DEPRECIATION, AMORTISATION & IMPAIRMENT 5 24,509,813 32,723,791LOSS ON SALE OF ASSETS 4,570,150 1,770,596LOSS ON SALE OF INVESTMENTS (NET) — 4,533,094TOTAL Rs. 1,851,878,589 2,273,678,408

III) PROFIT :PROFIT / (LOSS) BEFORE TAXATION 56,113,230 (60,010,235)PROVISION FOR TAXATION :— CURRENT TAX 6,602,594 140,000— DEFERRED TAX ASSET 9,237,255 5,185,286— FRINGE BENEFIT TAX 28,127 863,888— SHORT /EXCESS PROVISION FOR TAX 1,316,115 2,698,900PROFIT / (LOSS) AFTER TAXATION 60,035,879 (53,129,937)ADD : SHARE OF PROFIT / (LOSS) OF MINORITY INTEREST 11,461,009 (3,676,498)LESS: ADJUSTMENT ON CHANGE IN HOLDING 10,813 —PROFIT / (LOSS) AFTER TAXATION 71,486,075 (49,453,439)BALANCE BROUGHT FORWARD 957,353,505 1,006,806,944

PROFIT AVAILABLE FOR APPROPRIATION 1,028,839,580 957,353,505APPROPRIATION :PROPOSED DIVIDEND 24,945,996 —TAX ON PROPOSED DIVIDEND 4,143,280 —BALANCE CARRIED FORWARD TO BALANCE SHEET 999,750,304 957,353,505

TOTAL Rs. 1,028,839,580 957,353,505EARNING PER SHARE (Face Value Rs.10/-)Basic 2.87 (1.94)Diluted 2.81 (1.90)(See Note No. 12 of Schedule 16)

SIGNIFICANT ACCOUNTING POLICIES & NOTES TOTHE CONSOLIDATED FINANCIAL STATEMENTS 16

Schedules referred to above form an integral part of the Consolidated Financial Statements.As per our report of even date.




48


CONSOLIDATED CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2010

PARTICULARS 2009-10 2008-09A) CASH FLOW FROM OPERATING ACTIVITIES : Rupees Rupees Rupees

NET PROFIT/(LOSS) BEFORE TAX AND EXTRAORDINARY ITEMS 56,113,230 (60,010,235)ADJUSTMENT FOR :Depreciation (Schedule 5) 24,509,813 32,723,791(Profit) / Loss on sale of Investment (Net) (16,496,758) 4,533,094Revaluation Loss on Investment (10,608,997) 9,147,087Interest received & paid 26,185,899 14,298,328(Profit) / Loss on Sale of Assets 4,570,150 1,770,596Dividend (15,606,231) (19,238,295)Misc. Expenditure written off 1,244,877 1,244,877Voluntary Retirement Scheme expenses written off 59,750,599 9,228,214Short or Excess Provision Written off (1,316,115) 2,698,900Share of Minority Interest (32,932,986) (1,976,592)

39,300,252 54,429,999

OPERATING PROFIT/(LOSS) BEFOREWORKING CAPITAL CHANGES 95,413,482 (5,580,236)ADJUSTMENT FOR :Trade and other Receivable 407,232,832 521,769,355Inventories (96,835,486) (2,242,183)Trade Payable (69,773,094) (338,217,604)

240,624,252 181,309,568CASH GENERATED FROM OPERATIONS 336,037,734 175,729,332Interest Paid (36,164,499) (31,233,948)Direct Tax Paid (5,524,101) (8,742,110)Voluntary Retirement Scheme expenses (20,480,247) —

(62,168,847) (39,976,058)CASH FLOW BEFORE EXTRAORDINARY ITEMS 273,868,887 135,753,275NET CASH FROM OPERATING ACTIVITIES 273,868,887 135,753,275

B) CASH FLOW FROM INVESTING ACTIVITIES :Purchase of Fixed Assets (20,112,109) (7,949,331)Sale of Fixed Assets 33,890,667 6,638,773Purchase of Investments (2,304,653,916) (1,300,289,400)Sale of Investments 2,056,229,911 1,113,045,734Interest received 7,887,470 16,935,620Dividend received 15,606,231 19,238,295NET CASH USED IN INVESTING ACTIVITIES (211,151,747) (152,380,309)

C) CASH FLOW FROM FINANCING ACTIVITIES :Proceeds from Issue of Share Capital includingshare premium amount (23,214,016) (59,295,674)Preliminary expenses incurred (712,338) (46,141,073)Proceeds/(Repayment) of Long Term Borrowing (106,060,506) 104,402,759

NET CASH USED IN FINANCING ACTIVITIES (129,986,860) (1,033,988)NET INCREASE IN CASH AND CASH EQUIVALENTS (67,269,720) (17,661,022)OPENING BALANCE OF CASH AND CASH EQUIVALENTS 160,135,843 177,796,865CASH AND CASH EQUIVALENTS AS AT 31.03.2010 92,866,123 160,135,843





49


SCHEDULE “1” As at 31.03.2010 As at 31.03.2009SHARE CAPITAL : Rupees Rupees RupeesAUTHORISED CAPITAL31000000 Equity Shares of Rs. 10/- each(Previous Year 31000000 Equity Shares of Rs. 10/- each) 310,000,000 310,000,000

310,000,000 310,000,000ISSUED CAPITAL24945996 Equity Shares of Rs.10/- each(Previous Year 25545996 Equity Shares of Rs.10/- each) 249,459,960 255,459,960

249,459,960 255,459,960

SUBSCRIBED AND PAID UP CAPITAL24945996 Equity Shares of Rs.10/- each(Previous Year 25545996 Equity Shares of Rs.10/- each) 249,459,960 255,459,9601) Out of which NIL (13216400) Equity Shares of Rs.10/- each

allotted as fully paid up by way of Bonus Shares capitalisedfrom security premium & reserves & surplus.

2) During the year under review, the company bought backfrom the open market through stock exchanges 600000(Previous Year 1486804) Equity Shares of Rs. 10/- each andpaid Rs.23,214,016/- (Previous Year Rs. 44,427,634/-)by way of Premium and the same including face value ofshares bought back has been debited to share premium andgeneral reserve account.

TOTAL Rs. 249,459,960 255,459,960

SCHEDULE “2”RESERVES AND SURPLUS1. Capital Redemption Reserve :

As per last Balance Sheet 14,868,040 —

Add : Transfer from Security Premium andGeneral Reserves 6,000,000 14,868,040

20,868,040 14,868,0402. Security Premium :

As per last Balance Sheet 15,354,326 74,650,000Less: Utilised during the year for buy-back of shares 11,816,296 44,427,634Less: Transfer to Capital Redemption Reserve 3,538,030 14,868,040

— 15,354,326

3. Capital Reserve :As per last Balance Sheet 47,970,000 47,970,000

4. General Reserve :As per last Balance Sheet 500,398,116 500,398,116

Less: Utilised during the year for buy-back of shares 5,397,720 —

Less: Transfer to Capital Redemption Reserve 2,461,970 —

492,538,426 500,398,116

Add : Transfer from P & L a/c — —

492,538,426 500,398,116

5. Profit & Loss Account 999,750,304 957,353,505

6. Foreign Currency Translation Reserves 2,222,123 (3,126,730)

TOTAL Rs. 1,563,348,893 1,532,817,257

SCHEDULES

50


As at 31.03.2010 As at 31.03.2009Rupees Rupees

SCHEDULE “3”SECURED LOANS :

The Hongkong and Shanghai Banking Corporation Limited 49,269,813 —

Packing Credit in Foreign Currency(Secured by Hypothecation of Present & Future Inventories, Receivablesand First and exclusive charge over all moveable assets and CorporateGuarantee by Holding Company M/s. Goldiam International Limited)

Punjab National Bank P.C. 52,499,286 102,221,137

Punjab National Bank P.C.F.C. 71,788,387 —

Punjab National Bank P.S.C. 38,949,958 37,713,000

Punjab National Bank F.O.B.D 31,291,952 —

(Secured by hypothecation of Stock, Debtors and Equitable Mortgage ofLeasehold Land & Factory Building at R-1 Cama Industrial Estate,Walbhat Road, Goregaon (East), Mumbai 400-063)

H.S.B.C. Bank (Hong Kong) — 166,897,922

(Current year US$ Nil (Previous year US$ 4.00 million, securedby Corporate Guarantee of Goldiam International Limited)

HDFC Bank Car Loan(Motor Car Loan is secured against Motor Cars) 1,746,818 —

TOTAL Rs. 245,546,214 306,832,059

SCHEDULE “4”UNSECURED LOANS :Other Loans:

From Directors 51,001,782 17,530,965

From Others 17,584,822 95,830,300

TOTAL Rs. 68,586,604 113,361,265

51


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52


SCHEDULE “6” No. of Face As at No. of As atShares Value 31.03.2010 Shares 31.03.2009

INVESTMENTS : Rupees Rupees RupeesA. LONG TERM INVESTMENTS

OTHER THAN TRADE:

In Equity Shares - Unquoted, fully paid up

1. Gujarat Pipavav Ports Limited 51500 10 51,500 51,500 51,5002. Sip Technologies Limited 1891 10 18,910 1,891 18,910

In Units of Mutual Fund, fully paid up No. of Units No. of Units1) J.M.Core 11 Fund Series 1 Dividend Option 1000000 10 8,450,800 1,000,000 8,450,8002) Kshitij Venture Capital Fund 30000 1000 30,000,000 30,000 30,000,000


Barclays Investments & Loans (India) Ltd. Sr-115 BR NCD(*) 34 1000000 34,000,000 — —Barclays Investments & Loans (India) Ltd. Sr-121 BR NCD(*) 25 1000000 25,000,000 — —Morgan Stanley India Capital Pvt. Ltd. Sr-4 BR NCD (*) 50 1000000 50,000,000 — —Morgan Stanley India Capital Pvt. Ltd. Sr-13 BR NCD (*) 20 1000000 20,200,000 — —Morgan Stanley India Capital Pvt. Ltd. Sr-14 BR NCD (*) 5 1000000 5,050,000 — —Prakausali Investments (India) Pvt. Ltd. 12.75% NCD (*) 20 1000000 20,000,000 — —

TOTAL Rs. 192,771,210 38,521,210

B. CURRENT INVESTMENTSOTHER THAN TRADE:In Equity Shares - Quoted, fully paid up No. of Shares No. of Shares1) Classic Diamonds (I) Limited (Face value split to Rs 2) 5 2 102 1 82) Reliable Ventures Limited 50000 10 1,165,000 50,000 684,0003) Ruby Mills Limited — — — 826 233,3044) S B & T International Limited 1 10 10 1 75) Shrenuj & Co Limited (Face value split to Rs 2) 5 2 74 1 706) Suashish Diamonds Limited 1 10 69 1 697) Suraj Diamonds & Jewellery Limited 1 10 43 1 218) Titan Industries Limited 1 10 257 1 257In Redeemable Preference Shares - Unquoted, fully paidK.S.Realty Construction Private Limited 2750 10 27,500 2,750 27,500In Debentures - Unquoted, fully paid up No. of No. of

Debentures DebenturesJayneer Capital Private Limited 13% NCD(*) 3 50000 15,204,135 — —K.S.Realty Construction Private Limited — — — 50 50,000,000Morgan Stanley India Capital Private Limited Sr-3 BR NCD(*) 50 1000000 50,000,000 — —

In Debentures - Quoted, fully paid upKotak Nifty Link Debentures Type II — — — 4 10,000,000In Units of Mutual Fund -UNQUOTED No. of Units No. of Units1) Kotak Alternate Opportunities (India) Fund 17,443,125 11,750,0002) Bharti AXA Equity Fund Eco Plan - Growth 37762 10 658,725 — —3) Bharti AXA Treasury Advantage Fund -

Institutional Plan - Daily Dividend 40000 1000 40,000,0004) Birla Sun Life Dynamic Bond Fund -

Retail - Quarterly Dividend — — — 481817 5,146,1565) Birla Sun Life Income Plus - Quarterly Dividend — — — 835967 9,349,3676) Birla Sun Life MIP II - Savings 5 - Growth 923462 10 15,000,000 — —7) BSL Medium Term Plan - Institutional -

Weekly Dividend - Reinvest 4032726 10 40,433,592 — —8) DWS Twin Advantage Fund - Growth 1981519 10 30,000,000 — —9) Fortis FTP Ser 12 Plan B Institutional Growth — 10 — 1000000 10,000,000

(Old Name ABN Amro FTP Ser 12 Plan B Inst Growth)10) Fortis Flexi Debt Fund - Regular - Quarterly Dividend — 10 — 880441 8,804,41211) Fortis Money Plus Inst. Weekly Dividend Reinvest — 10 — 2519896 25,198,96312) Fortis Money Plus Institutional Daily Dividend Reinvest 10227761 10 102,309,319 — —13) ICICI Prudential Flexible Income Plan

Weekly Dividend Reinvest 10 10532464 111,029,01914) ICICI Prudential Flexible Income Plan Weekly

Dividend Reinvest 386623 100 40,771,72015) ICICI Prudential Inst. Income Plan - Quarterly Dividend — 10 — 4906733 56,185,03316) ICICI Prudential Inst. Short Term Plan - DR - Fortnightly — 10 — 846955 10,142,20417) ICICI Prudential Inst. Short Term Plan - DR- Monthly — 10 — 4999209 59,811,034

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SCHEDULE “7” As at 31.03.2010 As at 31.03.2009Rupees Rupees Rupees

CURRENT ASSETS, LOANS AND ADVANCESI) CURRENT ASSETS :

a) INVENTORIES :Stock of Consumable Stores & Spare parts (at cost) 3,211,075 3,224,359Raw Materials 671,707,874 620,290,475(at cost or net realisable value whichever is less)Finished Goods (at cost or net realisable valuewhichever is less) 186,947,097 141,515,726

TOTAL Rs. 861,866,046 765,030,560

b) SUNDRY DEBTORS :(Unsecured)Outstanding for a period exceeding six months– Considered good 485,910,227 611,357,130– Considered doubtful — —Other Debts– Considered good 280,029,783 554,233,722– Considered doubtful — —

TOTAL Rs. 765,940,010 1,165,590,852

c) CASH AND BANK BALANCES :Cash on Hand 4,576,974 6,241,746Balance with Schedule Banks in– Current Account 22,706,053 83,935,420– EEFC Account 59,511,123 53,702,825– Fixed Deposit with Banks 6,071,974 16,255,852

TOTAL Rs. 92,866,123 160,135,843

II) LOANS AND ADVANCES:(Advances recoverable in cash or in kind or for value to be received)Loans and Advances 74,560,991 72,512,539Security & Other Deposits 2,730,338 4,745,549

77,291,329 77,258,088

TOTAL Rs. 1,797,963,509 2,168,015,343

SCHEDULE “8”CURRENT LIABILITIES & PROVISIONS :CURRENT LIABILITIES :Sundry Creditors :Dues to Micro, Small and Medium Enterprises 4,112,092 2,924,300Dues from others Creditors 463,332,024 524,652,247Overdrawn balance with Banks — 878,446Advance from Customers 2,341,571 10,953,920

469,785,687 539,408,913

18) Kotak FMP 13 Months Series 6 Growth 2000000 10 20,000,000 — —19) Kotak Floater Long Term - Daily Dividend 21912 10 220,873 — —20) Kotak Quarterly Interval Plan Series 1 - Dividend 3000000 10 30,000,000 — —21) Reliance Income Fund - Retail Plan -

Quarterly Dividend Plan — 10 — 2872263 37,316,73222) Tata Floater Fund - Daily Dividend 1504106 10 15,094,606 — —23) Templeton India Income Opportunities Fund - Growth 3000000 10 30,000,000 — —24) Templeton Floating Rate Income Fund Long Term Plan 12885061 10 128,948,859 5029593 50,320,094

Super Institutional - Daily Dividend ReinvestTOTAL Rs. 577,278,008 455,998,247

Note (*) : (NCD refers to Non Convertible Debentures)

TOTAL Rs. 770,049,218 494,519,457

SCHEDULE “6” contd. No. of Face As at No. of As atUnits Value 31.03.2010 Units 31.03.2009

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PROVISIONS :Proposed Dividend 24,945,996 —Provision for Tax on Proposed Dividend 4,143,280 —Provision for Current Tax 5,041,139 4,026,773Provision for Wealth Tax 156,335 140,000Provision for Fringe Benefit Tax (Net off Advance Tax) — 19,700

34,286,750 4,186,473

TOTAL Rs. 504,072,437 543,595,386SCHEDULE “9”MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Preliminary expenses 417,582 472,663Less: written off (55,081) (55,081)

362,501 417,582Pre-operative expenses 2,269,554 3,459,350Add : Preoperative expenses incurred during the year 712,338 —Less: written off (1,189,796) (1,189,796)

1,792,096 2,269,554Voluntary Retirement expenses 36,912,859 46,141,073Add : Addition during the year 20,480,247 —

57,393,106 46,141,073Less : written off during the year (57,393,106) (9,228,214)

— 36,912,859

TOTAL Rs. 2,154,597 39,599,995

For the year For the yearended 31.03.2010 ended 31.03.2009

SCHEDULE “10” Rupees Rupees RupeesSALES :A) EXPORTS 1,776,452,674 2,101,729,008B) LOCAL 10,764,433 26,590,226

1,787,217,107 2,128,319,234LESS: VAT 103,115 93,714

1,787,113,992 2,128,225,520

TOTAL Rs. 1,787,113,992 2,128,225,520

SCHEDULE “11”INCREASE/DECREASE IN STOCK :Closing Stocks - Finished Goods 186,947,097 141,515,726Opening Stocks - Finished Goods 141,515,726 104,929,671

TOTAL Rs. 45,431,371 36,586,055

SCHEDULE “12”OTHER INCOME :Rent 14,565,625 7,236,110Debit / Credit Balance written off 17,689,056 2,134,714Discount received 5,001 11,946Dividend on Mutual Funds 15,604,219 19,045,908Profit on Sale of Investments (net) 16,496,758 —Dividend on Shares 2,012 192,387Miscellaneous Income 773,135 1,253,304Interest received 9,978,600 16,935,620Exchange Difference — 2,029,488Sales Tax Refund — 17,120Consultancy Income 332,050 —

TOTAL Rs. 75,446,456 48,856,597

SCHEDULE “8” contd. As at 31.03.2010 As at 31.03.2009Rupees Rupees Rupees

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Rupees RupeesSCHEDULE “13”RAW MATERIALS CONSUMED :Opening Stock 620,290,475 653,420,700Add: Purchases 1,341,668,730 1,559,715,641

1,961,959,205 2,213,136,341Less : Closing Stock 671,707,874 620,290,475

TOTAL Rs. 1,290,251,331 1,592,845,866

SCHEDULE “14”MANUFACTURING AND OTHER EXPENSES :MANUFACTURING EXPENSES :Stores & Spares 9,874,870 9,565,305Power & Water 12,266,796 17,669,119Repairs & Maintenance (Building) 196,044 670,605Machinery & Electrical Repairs 613,558 1,310,805Grooving Charges 1,509,719 1,523,090Insurance (Building) 151,483 204,857Others 24,594,379 18,533,422

49,206,849 49,477,203WAGES, SALARIES AND OTHER BENEFITS :Salaries, Wages, Bonus & Ex-gratia 47,370,641 146,811,435Contribution to E.S.I.C. 429,425 1,787,832Contribution to Provident Fund 1,104,633 4,945,316Voluntary Retirement Scheme expenses written off 59,750,599 9,228,214Contribution to Group Gratuity Scheme 1,403,576 3,590,043Contribution to Life Cover Premium under Group Gratuity Scheme 18,260 56,213Workmen & Staff Welfare expenses 2,361,489 3,097,402

112,438,622 169,516,455OTHER EXPENSES :Insurance Charges 875,083 1,247,336Exchange Difference Others 98,088,146 151,863,660Rent, Rates & Taxes 10,579,901 15,767,631Repairs & Maintenance 2,778,754 2,566,610Commission on Sales 16,403,479 14,856,504Advertisement 440,291 2,013,832Travelling and Conveyance 6,890,117 10,682,066Telephone Charges 2,032,167 3,049,101Printing & Stationery 1,214,420 1,962,638Auditors' Remuneration 428,075 569,710Donation 28,600 43,601Vehicle expenses 1,772,851 2,468,531Portfolio Management Fees 34,000 1,269,366Security Transaction Tax 131,291 203,800Bad Debts 17,269,649 1,119,427General expenses 44,033,674 65,572,835

203,000,497 275,256,647

TOTAL Rs. 364,645,968 494,250,305

SCHEDULE “15”INTEREST & FINANCE CHARGES :Bank Charges 10,690,547 8,358,340Interest 25,312,847 22,739,388Stamp Duty 161,106 136,220

TOTAL Rs. 36,164,499 31,233,948

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SCHEDULE ‘16‘

SIGNIFICANT ACCOUNTING POLICIES TO THE CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSSACCOUNT

1) SIGNIFICANT ACCOUNTING POLICIES :

A NATURE OF OPERATIONS :Goldiam International Limited ("Parent Company" or "The Company"), a public limited company, together with itssubsidiaries, joint venture and associates (hereinafter collectively referred to as the " Group") operates as amanufacturer of Diamond studded Gold, Platinum and Silver Jewellery. The business includes entire chain of marketing,production and distribution of Jewellery all over the world.The Parent Company's shares are listed for trading on the Bombay Stock Exchange Ltd. and National Stock Exchangeof India Ltd.

B BASIS OF ACCOUNTING :(i) The financial statements have been prepared and presented under historical cost convention on the accrual

basis of accounting and comply with the Accounting Standards as specified in the Companies(Accounting Standard) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India(ICAI), the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and ExchangeBoard of India, to the extent applicable.

(ii) These consolidated financial statements have been prepared and presented under the historical cost convention,except as disclosed in the financial statements, on accrual basis of accounting in accordance with the generallyaccepted accounting principles (GAAP) in India and comply with the Accounting Standard (AS)-21 "ConsolidatedFinancial Statements" and Accounting Standard (AS)- 27 "Financial Reporting of Interest in Joint Ventures" inConsolidated Financial Statements to the extent applicable.

(iii) The Financial Statements are prepared under historical cost convention on accrual basis and have been preparedin accordance with the Accounting Standards issued by The Institute of Chartered Accountants of India. Theaccounting policies have been consistently applied by the Group unless otherwise stated.

(iv) In preparing Group's financial statements in conformity with accounting principles generally accepted in India,management is required to make estimates and assumptions that affect the reported amounts of assets andliabilities and the disclosure of contingent liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period, actual results could differ from those estimates.

(v) The financial statements of the Company, and its subsidiaries are drawn upto the same reporting date i.e.31st March, 2010. The consolidated financial statements of Goldiam USA Inc., "OOO Tiara Jewels", subsidiaryof Diagold Designs Limited in USSR, and Goldiam Jewels SDN BHD, joint venture of Diagold Designs Limitedin Malaysia, have been consolidated on the basis of the last financial review report presented by the Subsidiaryas on 31st March, 2010 and unaudited accounts of the Joint Venture as on 30th September, 2009.

C Principles of consolidation :(i) The consolidated financial statements relate to GOLDIAM INTERNATIONAL LIMITED ('the Company'), its

subsidiaries, consolidated financial statements of subsidiary and Joint Venture "(The Group)" which have beenprepared in accordance with Accounting Standards on Consolidated Financial Statements (AS-21) and FinancialReporting of Interests in Joint Venture (AS-27) issued by the Institute of Chartered Accountants of India.

(ii) The financial statements of the Company and its subsidiary companies are combined on a line-by-line basis byadding together the book values of like items of assets, liabilities, income and expenses, after eliminatingintra-group balances and intra-group transactions resulting in unrealised profits or losses.

(iii) In case of foreign subsidiaries, being non-integral foreign operations, revenue items are consolidated at theaverage rate prevailing during the year. All assets and liabilities are converted at rates prevailing at the end ofthe year. Any exchange difference arising on consolidation is recognised and shown as Translation Reserves.

iv) The difference between the proceeds from disposal of investment in a subsidiaries and the carrying amount ofits assets less liabilities as of the date of disposal is recognised in the consolidated statement of Profit and Lossaccount being the profit or loss on disposal of investment in subsidiary.

v) The excess/ deficit of cost to the Parent Company of its investment over its portion of net worth in the consolidatedentities at the respective dates on which the investment in such entities was made is recognised in the financialstatements as goodwill / capital reserve. The Parent Company's net worth in such entities is determined on the basisof the book values of assets and liabilities as per the financial statements of the entities as on the date of the investment.

(vi) Minority interest in the net assets of the consolidated subsidiaries consist of :(1) The amount of equity attributable to minorities at the date on which accounts are made.(2) The minorities' share of movements in the reserves since the date the parent-subsidiary relationship came

into existence.(vii) Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in line

with the Parent Company's financial statements.

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(viii) As far as possible, the consolidated financial statements are prepared using uniform accounting policies for liketransactions and other events in similar circumstances and are presented in the same manner as the Company'sseparate financial statements.

(ix) The Basis of consolidation for Joint Venture :In preparing consolidated financial statement the consolidation of Joint Venture is done on proportionateconsolidation method.(a) Monetary Items of the Joint Venture have been translated using the Closing Exchange rate at the date of

the Balance Sheet.(b) Fixed Assets of the Joint Venture have been translated at the transaction date.(c) The Net Exchange Difference resulting from the translation of the items in the Financial Statements of Joint

Venture have been recognised as income or expense for the period.

D Accounting Policies:(i) Fixed Assets :

Fixed assets (excluding land & building) are stated at historical cost less accumulated depreciation. Land of oneof the subsidiaries has been revalued as on 31st March, 2007 at replacement values. Difference in replacementvalue and historical cost has been transferred to Revaluation Reserve Account of the subsidiary in that year. Nodepreciation has been charged on revalued asset as the revaluation is with respect to Land.

(ii) Depreciation :Depreciation on Assets is provided on " Written-down method " (except in the case of foreign subsidiary, till thedate it became joint venture namely Goldiam HK Limited), the depreciation is provided at the rates based on theestimated useful life of the respective assets, as determined by the management or on the minimum depreciationrates as prescribed under the domestic law of the Subsidiary, whichever is higher. Depreciation in respect ofGoldiam Jewels Limited is provided on Straight-line method. Depreciation on assets in Limited Liability Partnershipfirm (Temple Designs LLP) is provided as allowable under Income Tax Act, 1961. The effect of the same is notsignificant in the Consolidated Financial Statement.

(iii) Impairment of Assets :i) At each Balance sheet date, the Group determines whether a provision should be made for impairment

loss on fixed assets by considering the indications that an impairment loss may have occurred in accordancewith Accounting Standard (AS)-28 "Impairment of Assets". A Provision for Impairment loss is made whereverthe carrying amount of an asset exceeds its recoverable amount. A previously recognized impairment lossis increased or reversed depending on changes in circumstances. However, the carrying value after reversalis not increased beyond the carrying value that would have prevailed by charging usual depreciation if noimpairment loss had been recognized.

ii) After Impairment, depreciation is provided on the revised carrying amount of the assets.

(iv) Inventories :i) Raw materials are valued at cost or net realisable value, whichever is lower, on first in first out basis.ii) Stores and Spares are valued at cost on first in first out basis.iii) Cost of finished goods comprises of direct material, conversion cost and all other cost incurred in bringing

material to its present location and are valued at cost or net realisable value whichever is lower.Trading goods are valued at cost or net realisable value, whichever is lower.

v) Foreign Currency Transactions and Translation of Financial Statements of Foreign Subsidiaries :Monetary Assets (including bank account maintained in foreign currency) except those which are covered byforward exchange contracts and monetary liabilities, i.e. items to be received or paid in foreign currency, arestated at the exchange rates prevailing on the date of Balance Sheet. In case of transactions which are coveredby forward exchange contracts, the difference between the forward rate and the spot rate is recognised asincome or expense over the life of contracts. Realised gains and losses on foreign currency transactions arerecognised in the Profit & Loss Account.Reporting currency for the group is Indian Rupees. The functional currency of foreign Subsidiaries is US Dollarand HK Dollar (till the date of subsidiary, subsequently a Joint Venture). In preparing consolidated financialstatement both monetary and non-monetary Assets and Liabilities are translated using the exchange rate as atthe Balance Sheet date and Revenues, Cost and Expenses are translated using average of Exchange Ratesduring the reporting period. Share Capital and Opening Reserves and Surplus, Opening Fixed Assets are carriedat historical Cost. Resultant currency translation exchange Gain/Loss is disclosed as "Foreign CurrencyTranslation Reserve" in Reserves and Surplus.Monetary items which are covered by forward exchange contracts, the difference between the year end rate andrate on the date of the contract is recognised as exchange difference and is recognised over the life of the contract.Any profit or loss arising on cancellation or renewal of forward foreign exchange contracts is recognised asincome or expense for the year. In respect of foreign currency option contracts which are entered into to hedge

58


highly probable forecasted transactions, the cost of these contracts, if any, is expensed over the period of thecontract. Any profit or loss arising on settlement or cancellation of currency options is recognised as income orexpense for the period in which settlement or cancellation takes place. The effect of these currency optioncontracts outstanding at the year-end in the form of unrealised gain/losses, is recognised.

(vi) Investments :i) Investments that are intended to be held for more than a year from the date of acquisition and those having

fixed maturity period of more than a year are classified as long-term Investments and are stated at cost.Provision for diminution in value of long-term investments is made, if the diminution is other than temporary.

ii) Current investments are valued at cost or market value, whichever is lower, on scrip wise basis. Cost isdetermined on First In First Out (FIFO) basis.

iii) Reclassification of investments are made at the lower of cost and fair value at the date of transferwherever available.

vii) RECOGNITION OF INCOME AND EXPENDITURE :Revenues/Incomes and Costs/Expenditures are generally accounted on accrual basis as they are earnedor incurred.

SALES :Domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basisof dates of Airway Bills. Domestic sales are disclosed net of value added tax, discounts and returns as applicable.

DIVIDEND :Revenue is recognised when the right to receive is established.

INTEREST :Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rateapplicable.

viii) RETIREMENT BENEFITS TO EMPLOYEES :Liabilities in respect of defined benefit plans other than Provident Fund and E.S.I.C. are determined based onactuarial valuation. Short Term Benefits are recognised immediately in the profit and loss account. In respect ofProvident Fund, ESIC and Labour Welfare Fund are charged to Profit and Loss Account when contributions torespective fund are due. In respect of foreign subsidiaries & Joint Venture, the same has been accounted as perrespective Law.

ix) SEGMENT INFORMATION :The Company prepares its segment information in conformity with the accounting policies adopted for preparingand presenting the financial statements of the company as a whole and the company has two business segmentviz. Jewellery Manufacturing and Investment Activity.

x) EARNING PER SHARE :Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholdersby the weighted average number of equity shares outstanding during the year. For the purpose of calculatingdiluted earnings per share, the net profit or loss attributable to equity shareholders and the weighted averagenumber of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

xi) PROVISION FOR CURRENT AND DEFERRED TAX :Tax expense comprising of Current, deferred tax and fringe benefit taxes :Income Tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with theIncome tax law) and deferred tax charge or credit.Deferred tax charge or credit reflects the tax effects of timing differences between accounting income andtaxable income for the period. The deferred tax charge or credit and corresponding deferred tax liabilities orassets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheetdate. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can berealised in future; however where there is unabsorbed depreciation or carry forward losses, deferred tax assetsare recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewedat each balance sheet date and are written-down or written-up to reflect the amount that is reasonably / virtuallycertain (as the case may be) to be realised.

Provision for Fringe Benefit tax for the year has been determined in accordance with the provision ofsection 115WC of the Income Tax Act, 1961.

xii) PROVISIONS/ CONTINGENCIES :A Provision is created when an enterprise has a present obligation as a result of past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount and it is probable that anoutflow of resources will be required to settle the obligation. A disclosure for contingent liability is made when

59


there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resourcesis remote, no provision or disclosure is made.The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisabilityof such assets. However, if it has become virtually certain that an inflow of economic benefits will arise, assetsand related income is recognised in the financial statements of the period in which the change occurs.

xiii) MISCELLANEOUS EXPENDITURES :Expenses included under the head "Miscellaneous Expenditure" are Voluntary Retirement payments andPreliminary Expenses. A Voluntary Retirement Scheme was announced in the last quarter of the previous year.In accordance with the transitional provision contained in Accounting Standard 15, the company has chosen toamortise such expenses in equal quarterly installments over a period ending on 31st March, 2010. PreliminaryExpenses are written off over the period of five years.

2) The Consolidated accounts for the year ended 31st March, 2010 were consolidated on the basis of the auditedaccounts presented by the Subsidiaries Diagold Designs Limited, Goldiam Jewels Limited, Goldiam Jewellery Limitedand Limited Review Report presented by subsidiary M/s. Goldiam USA, Inc.With effect from 23rd July, 2009, the group holding in Goldiam HK Limited, Hong Kong, is reduced from 50.27% to49.93% due to non-subscription to the rights issue announced by Goldiam HK Limited. Accordingly accounts ofGoldiam HK Limited have been consolidated upto 22nd July, 2009 as subsidiary based on the unaudited accountspresented by Goldiam HK Limited and thereafter as per Financial Reporting of Interests in Joint Venture (AS-27)issued by the Institute of Chartered Accountants of India as per the audited accounts presented by Joint Venture.

3) a) During the year under review, subsidiary M/s. Diagold Designs Limited has formed a Limited Liability PartnershipFirm namely Temple Designs LLP as a designated partner with a share of profit of 95%. The same has beenconsolidated as per the audited accounts provided by Temple Designs LLP as per Financial Reporting of Interestsin Joint Venture (AS-27) issued by the Institute of Chartered Accountants of India.

b) During the year under review, M/s. Diagold Designs Limited has invested 0.0325% in Goldiam HK Limited. Investmentin Goldiam HK Limited has increased the total holding of Goldiam International Limited from 49.93% to 49.96%.The Consolidated accounts have been consolidated as per the total holding by the Group as per Financial Reportingof Interests in Joint Venture (AS-27) issued by the Institute of Chartered Accountants of India.

4) The consolidated accounts of the joint venture of Diagold Designs Limited namely Goldiam Jewels SDN BHD hasbeen consolidated on the basis of the unaudited accounts upto 30th September, 2009 presented by the Joint Ventureand subsidiary of Diagold Designs Limited, “OOO” Tiara Jewels, has been consolidated on limited review report ason 31st March, 2010 presented by the subsidiary.

5) Subsidiaries :The Subsidiary companies considered in the financial statements are :

Name of the subsidiary Country of Incorporation Proportion of ownership interest2009-10 2008-09

Diagold Designs Limited India 50.99% 50.99%Goldiam Jewels Limited India 50.55% 50.55%Goldiam Jewellery Limited India 100.00% 100.00%Goldiam HK Limited (upto 22.07.2009) Hong Kong 50.725% 50.725%Goldiam USA, Inc. USA 100.00% 100.00%

6) Step down Subsidiary :Name of the subsidiary Country of Incorporation Proportion of ownership interest

2009-10 2008-09"OOO" Tiara Jewels (Subsidiary of Diagold Designs Limited) USSR 51.00% 51.00%

7) Joint Ventures :a) The financial statements of the following companies which are in the nature of jointly controlled entities have

been consolidated as per AS-27

Percentage Holding (%)Name of the Company Country of For the Year/ For the year Capital Contingent

Incorporation Period ended ended Commitment Commitment31.03.2010 31.03.2009

Goldiam HK Limited Hong Kong 49.96% — — —(Joint venture of Holding Company)(from 23.07.2009)Goldiam Jewels SDN BHD Malaysia 30.00% 30.00% — —(Joint Venture of SubsidiaryDiagold Designs Limited)

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The movement in the Group's share of the aggregate post acquisition reserves of joint ventures are as follows :Goldiam HK Goldiam HK Goldiam Jewels Goldiam Jewels

Limited Limited SDN BHD SDN BHDFor the Period For the Period For the Period For the Period

ended 31.03.10 ended 31.03.09 ended 30.09.09 ended 30.09.08Proportionate Reserves and Surplusas at the beginning of the year — N.A. (487,986) (401,655)Proportionate Transfer to Reserves — N.A. — —Proportionate surplus / (deficit) in Profitand Loss Account (net of transfer toreserves, dividend etc.) (8,909,189) N.A. (48,500) (86,331)Proportionate Reserves and Surplusas at the end of the year (8,909,189) N.A. (536,486) (487,986)

In compliance with the Accounting Standard relating to "Financial Reporting of Interests in Joint Venture' (AS-27), issuedby the Institute of Chartered Accountants of India, the Company has interests in the following jointly controlled entities,which are incorporated out of India.Name of the Company & Percentage of For the Period Ended For the Period EndedCountry of Incorporation Shareholding 31st March, 2010 31st March, 2009

(%) Assets (Rs.) Liabilities (Rs.) Income (Rs.) Expenditure (Rs.)

Goldiam HK Limited, Hong Kong 49.96% 58,142,296 22,955,092 63,896,610 72,805,800

Name of the Company & Percentage of For the Period Ended For the Period EndedCountry of Incorporation Shareholding 30th September, 2009 30th September, 2008

(%) Assets (Rs.) Liabilities (Rs.) Income (Rs.) Expenditure (Rs.)Goldiam Jewels SDN BHD, Malaysia(Joint Venture of Subsidiaryof Diagold Designs Limited) 30% 930,826 79,239 — 48,500

b) The share of interest in Joint Venture is as given below :Consolidated Proportionate share of Joint Venture :

(Amount in Rupees)As at 31st March, 2010 As at 31st March, 2009

Group Joint Ventures Total Group Joint Ventures TotalSOURCES OF FUNDSShareholder’ FundsShare Capital 249,459,960 — 249,459,960 255,459,960 — 255,459,960Reserves and Surplus 1,563,348,893 — 1,563,348,893 1,532,817,256 — 1,532,817,256Minority Interest 150,218,825 — 150,218,825 194,612,820 — 194,612,820

1,963,027,678 — 1,963,027,678 1,982,890,036 — 1,982,890,036Loan FundsSecured Loans 245,546,214 — 245,546,214 306,832,059 — 306,832,059Unsecured Loans 45,896,509 22,690,095 68,586,604 113,361,265 — 113,361,265

291,442,723 22,690,095 314,132,818 420,193,324 — 420,193,324

TOTAL Rs. 2,254,470,402 22,690,095 2,277,160,496 2,403,083,360 — 2,403,083,360APPLICATION OF FUNDSFixed Assets (Net) 188,437,094 6,820,761 195,257,855 237,837,626 135,824 237,973,450Investments 770,049,218 — 770,049,218 494,519,458 — 494,519,458Deferred Tax Assets 15,807,755 — 15,807,755 6,570,500 — 6,570,500Current Assets, Loans and Advances:Inventories 822,754,487 39,111,559 861,866,046 765,030,560 — 765,030,560Cash and bank 89,417,700 3,448,423 92,866,123 160,043,908 91,935 160,135,843Sundry Debtors 721,971,450 43,968,560 765,940,010 1,165,582,930 7,922 1,165,590,852Loans and Advances 76,293,640 997,689 77,291,329 77,258,088 — 77,258,088

1,710,437,277 87,526,231 1,797,963,508 2,167,915,486 99,857 2,168,015,343Less:Current Liabilitiesand Provisions 465,062,720 39,009,717 504,072,437 543,489,837 105,549 543,595,386

1,245,374,558 48,516,513 1,293,891,071 1,624,425,649 (5,692) 1,624,419,957Misc. Expenditures 1,442,259 712,338 2,154,597 39,599,995 — 39,599,995

TOTAL Rs. 2,221,110,884 56,049,612 2,277,160,496 2,402,953,228 130,132 2,403,083,360

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(Amount in Rupees)

2009-10 2008-09

Group Joint Ventures Total Group Joint Ventures Total

Turnover & Other Income 1,797,573,826 64,986,622 1,862,560,448 2,177,082,117 — 2,177,082,117Increase / Decrease in Stock 31,590,423 13,840,948 45,431,371 36,586,055 — 36,586,055

1,829,164,249 78,827,570 1,907,991,819 2,213,668,172 — 2,213,668,172ExpenditureRaw Materials Consumed 1,222,513,102 67,738,229 1,290,251,331 1,592,845,866 — 1,592,845,866Purchase Trading 130,491,951 — 130,491,951 115,075,931 — 115,075,931Wages, Salaries & other Benefits 105,356,264 7,082,358 112,438,622 169,516,455 — 169,516,455Manufacturing expenses 45,166,694 4,040,154 49,206,848 49,477,203 — 49,477,203Other Expenses 199,752,293 3,248,205 203,000,498 275,209,299 47,348 275,256,647Interest 34,625,109 1,539,390 36,164,499 31,233,695 253 31,233,948Preliminary Expenses 1,244,877 — 1,244,877 1,244,877 — 1,244,877Depreciation 23,810,067 699,746 24,509,813 32,685,061 38,730 32,723,791Loss on Sale of Assets 19,769 4,550,381 4,570,150 1,770,596 — 1,770,596Loss on Sale of Investments 4,533,094 — 4,533,094Profit before tax 66,184,123 (10,070,893) 56,113,230 (59,923,905) (86,331) (60,010,236)

8) CONTINGENT LIABILITIES NOT PROVIDED FOR :a) The Group has outstanding performance guarantee of Rs.65,851,474/-as on the Balance Sheet date, executed

in favour of Deputy Commissioner of Customs (Previous Year Rs.10,019,250/-)b) The Municipal Corporation of Greater Mumbai has preferred an appeal in the High Court of Judicature at Bombay

against the order of Small Causes Court rejecting the claim of Municipal Corporation of Greater Mumbai for anamount of Rs.13,696,775/- (Previous year Rs. 13,696,775/-) on account of property tax.

c) The Group has outstanding demand of Income tax of Rs.576,924/- for assessment year 2004-05 as on theBalance Sheet date, the said demand is outstanding and not provided as disputed in appeal.

d) The Group had executed Bank Guarantee of US Dollar Nil favouring The Hongkong & Shanghai Banking CorporationLtd., Hong Kong for its Subsidiary/Joint Venture Goldiam HK Limited, Hong Kong. (Previous year US Dollar 4,000,000)

e) Commitment under contribution agreement with Kotak Alternate Opportunities (India) Fund is Rs.6,250,000/-(Previous Year Rs.13,250,000/-)

9) FINANCIAL INSTRUMENTS / FORWARD CONTRACTS :The Company has entered into following forward / derivative instruments :The Company is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flowsdenominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by followingestablished risk management policies including the use of derivatives. The Company enters into forward exchangeand option contracts, where the counterparty is bank. The forward contract or option are not used for trading orspeculation purpose.Outstanding Forward Contract for hedging currency risk against Export Receivables entered into by the company ason 31st March, 2010 is US$ 3.08 million (Previous years US$ 8.65 million) equivalent to Rupees 14.68 Crores(Previous year Rs.36.64 Crores) and for Import Payables and Bank borrowings outstanding Forward Contract enteredinto by the company as on 31st March, 2010 is US$ Nil (Previous Year Rs.1.00 million) equivalent to Rs. Nil(Previous year Rs. 5.19 Crores).In respect of derivatives contract relating only to the Company's own export and imports business and foreign currencydebt obligations, in accordance with the principles of prudence and other applicable guidelines as per AccountingStandards read with Schedule VI of the Companies Act, 1956, the Company has recognisedRs. 8.12 Crores (Previous year Rs. 15.53 Crores) in Profit and Loss Account and charged the amount to profit andloss account in respect of derivative contracts outstanding as at 31st March, 2010.

Unhedged foreign currency exposure :

PARTICULARS 31.03.2010 31.03.2009in millions in Lakhs in millions in Lakhs

Outstanding Receivables US$ 15.35 Rs.7,040.65 US$ 12.64 Rs.601.11Outstanding creditors for goods and spares US$ 9.065 Rs.4125.81 US$ 6.453 Rs.3,048.63Exchange Earner's Foreign Currency a/c with Banks US$ 1.317 Rs.594.60 US$ 1.085 Rs.536.46Outstanding Payable for Foreign Outward Bill Discount a/c with Bank US$ 1.590 Rs.717.88 US$ 4.665 Rs.2,376.78Outstanding Payable for Packing Credit Loan in Foreign Currency US$ 0.693 Rs.312.92 — —Outstanding Loan Payable in Foreign Currency US$ 0.102 Rs.45.84 US$ 0.56 Rs.285.87Exchange Earner's Foreign Currency a/c with Banks Euro 0.001 Rs.0.51 Euro 0.001 Rs.0.57

62


10) DIFFERENCE IN ACCOUNTING POLICY FOR DEPRECIATION :Depreciation on fixed assets relating to subsidiary companies, Goldiam USA, Inc., Goldiam HK Limited (upto 22.07.2009) andstep down subsidiary "OOO Tiara Jewels" are provided at the rates based on the estimated useful life of the respective assets,as determined by the management or on the minimum depreciation rates as prescribed under the domestic law of the Subsidiary,whichever is higher and in respect of subsidiary Goldiam Jewels Limited the same has been provided as per straight linemethod as against written down value method followed by the Company. Depreciation for the year includes Rs. 4,426,363/-(Previous year Rs.8,928,602/-) calculated on such basis. The impact of the difference in the accounting policy has not beencalculated as the depreciation amount itself is not significant. The net block included in the consolidated financial statementsin this respect as at 31st March, 2010 is Rs.28,698,441/- (as at 31st March, 2009 Rs.72,204,505/-).Depreciation on fixed assets relating to Joint Venture Temple Designs LLP has been provided as per the Income Tax law.Depreciation for the year includes Rs.661,473/- (Previous year Rs.Nil) calculated on such basis. The impact of the differencein the accounting policy has not been calculated as the depreciation amount itself is not significant. The net block included inthe consolidated financial statements in this respect as at 31st March, 2010 is Rs. 6,786,718/- ( as at 31st March, 2009 Rs.Nil).

11) Managerial Remuneration:2009-10 (Rs.) 2008-09 (Rs.)

i) Salaries 444,000 8,380,513ii) Perquisites 303,897 199,131iii) Sitting Fees 230,000 260,000iv) Commission 6,370,172 5,832,385

7,348,069 14,672,029

12) Earning per Share : 2009-10 2008-09Profit/(Loss) after Tax 71,486,075 (49,453,439)Weighted Avg. no. of shares + potential shares outstanding 25444093 26003736Earning per share (Basic) 2.87 (1.94)Earning per share (Diluted) 2.81 (1.90)

13) Related Party Transactions:As per Accounting Standard 18 issued by the Institute of Chartered Accountants of India, the disclosures of transactionswith related parties as defined in the Accounting Standard are given below:( a ) List of related parties and relationship where control exists or with whom transactions were entered into :

Name of the Related Party Relationshipi) Goldiam HK Limited Joint Venture of Holding Companyii) Goldiam Jewels SDN BHD Joint Venture of Subsidiaryiii) Mr. Manhar R. Bhansali Key Management Personneliv) Mr. Rashesh M. Bhansali Key Management Personnelv) Mrs. Ami R. Bhansali Key Management Personnel of Subsidiaryvi) Milan Mehta Key Management Personnel of Subsidiaryvii) Nirav Mehta Key Management Personnel of Subsidiaryviii) Mr. Nehal Mehta Key Management Personnel of Subsidiary/Joint Ventureix) Mrs. Shobhana Bhansali Relative of Key Management Personnelx) Mrs. Trupti Mehta Relative of Key Management Personnel of Subsidiaryxi) Mrs. Sweta Mehta Relative of Key Management Personnel of Subsidiaryxii) Sunshine Corporation Key Management Personnel has significant controlxiii) Diastud USA Inc. Key Management Personnel has significant controlxiv) Mr. Ashish Karnavat Key Management Personnel of Subsidiary

(b) Transaction during the year with related parties:(Amount in Rupees)

Sr. Nature of Transaction Key Management Relative of Key Enterprises over whichNo. Personnel Management Personnel Key Management

Personnel havedirect influence

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

i) Payments to & provisions for 6,814,172 14,412,029 — — — —Directors’ remuneration

ii) Issue of Equity Shares 4,163,520 — 832,260 — — —iii) Interest received — — — — 1,347,735 2,789,960iv) Interest paid 7,372,870 783,457 — — 1,538,325 2,677,932v) Loans received 72,500,000 17,500,000 — — — —vi) Sale of goods — — — — 24,313 —vii) Purchase of goods — — — — 750,216 294,659I) Outstanding Loan given as on 31st March — — — — 1,347,735 15,000,000II) Outstanding Loan received as on 31st March 52,563,433 23,801,734 — — 7,070,683 22,316,100III) Outstanding Receivables as on 31st March — — — — 1,682,213 743,850IV) Outstanding Payables as on 31st March — 5,832,385 — — 750,216 —

63


c) Disclosure in respect of Transaction with related parties during the yearSr. NATURE OF TRANSACTION Current Year Previous YearNo. 2009-10 2008-09

Rupees Rupeesi) Payments to & provisions for

Directors’ remuneration :Rashesh M. Bhansali 3,185,086 5,115,758Ami R. Bhansali 3,185,086 5,115,758Nehal Mehta — 4,180,513Ashish Karnavat 444,000 —

ii) Issue of Equity Shares :Rashesh M. Bhansali 260 —Manhar R. Bhansali 260 —Shobhana M. Bhansali 260 —Milan Mehta 3,198,000 —Trupti Mehta 650,000 —Nirav Mehta 679,000 —Sweta Mehta 182,000 —Nehal Mehta 286,000 —

iii) Interest received :Sunshine Corporation 1,347,735 2,789,960

iv) Interest paid :Rashesh M. Bhansali 6,976,437 30,965Sunshine Corporation 1,538,325 2,677,932Nehal Mehta 396,433 752,492

v) Loans receivedRashesh M. Bhansali 72,500,000 17,500,000

vi) Sale of goods :Diastud USA Inc. 24,313 —

vii) Purchase of goods :Diastud USA Inc. 750,216 294,659

I) Outstanding Loan given as on 31st MarchSunshine Corporation 1,347,735 15,000,000

II) Outstanding Loan received as on 31st MarchRashesh M. Bhansali 50,458,630 17,530,965Sunshine Corporation 7,070,683 22,316,100Nehal Mehta 2,104,803 6,270,769

III) Outstanding Receivables as on 31st MarchDiastud USA Inc. 1,682,213 743,850

IV) Outstanding Payables as on 31st MarchRashesh M. Bhansali — 1,316,627Ami R. Bhansali — 4,515,758Diastud USA Inc. 750,216 —

14 GENERAL DESCRIPTION OF DEFINED BENEFIT PLAN:GRATUITY :The Company makes annual contribution to the Employees’ Group Gratuity-cum-Life Assurance Scheme of the LifeInsurance Corporation of India, a funded benefit plan for qualifying employees. The scheme provides for lump sumpayment to vested employees at retirement/death while in employment or on termination of employment of an amountequivalent to 15 days service for each completed year of service or part thereof depending on the date of joining.The benefit vests after five years of continuous service.

Assumptions Gratuity Funded Gratuity Funded31st March, 2010 31st March, 2009

Rupees Rupees

Reconciliation of opening and closing balances of the presentvalue of the defined benefit obligation :Present Value of obligation as at beginning of year 4,452,134 6,237,392Current service cost 481,452 376,908Interest cost 353,263 410,751Actuarial (gain) / loss 5,133,087 7,169,784Benefits paid (9,653,739) (8,142,685)

Present Value of obligation as at end of the year 766,197 6,052,150

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Change in Plan assets Rupees RupeesPlan assets at period beginning, at fair value 4,005,181 5,686,689Expected return on plan assets 107,826 599,281Actuarial (gain) / loss 19,413 782,000Contribution 6,307,660 4,870,626Benefits paid (9,653,739) (8,069,685)

Plan assets at period end 2010, at fair value 786,341 3,868,911

Reconciliation of present value of the obligationand the fair value of plan assetsFair value of plan assets at the end of the period 708,975 3,853,961Present value of the defined benefit obligation at the end of the period 843,563 6,105,968Assets / (Liability) recognised in the balance sheet (134,588) (2,252,007)

Expenses for the yearCurrent service cost 481,452 376,908Interest cost on benefit obligation 353,263 410,751Expected return on plan assets (75,322) (599,281)Net actuarial (gain)/loss recognised in the year 5,179,530 7,169,784Total Expenses recognised in the Profit and Loss Account 5,938,923 7,443,875

Assumptions 31st March 2010 31st March 2009Gratuity Gratuity

Discount Rate 8.0% 7.5%Employee Turnover 5.0% 5.0%Salary Escalation 5.0% 4.0%Mortality 1994-96 LIC Mortality Table (Std)

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion andother relevant factors, such as supply and demand in the employment market.(I) Amounts recognised as an expense:

(i) Defined Benefit Plan :Gratuity includes gratuity cost of Rs. 17,95,125/- (Previous Year Rs. 36,46,256/-).Leave Encashment Rs. 5,23,691/- (Previous Year Rs. 24,72,487/-).

(ii) Defined Contribution Plan :Contribution to Provident Fund is Rs.17,85,678/- (Previous Year Rs. 49,45,316/-) , ESIC and Labour WelfareFund includes Rs.7,88,287/- (Previous Year Rs.17,87,832/-).

One of the subsidiary M/s. Goldiam Jewels Limited has not provided gratuity on actuarial valuation but on actual basis forthe previous year ended as on 31st March, 2009. The effect of the same is considered in the current financial year for thepurpose of consolidation.With respect to foreign subsidiaries and Joint ventures the same has been accounted as per their respective laws in thecountry of incorporation.

15 Information given in accordance with the requirements of AS 17 on “Segment Reporting”.The Company has identified Two Reportable Segments viz. Jewellery Manufacturing and Investment Activity. Segmentshave been identified and reported taking into account nature of products and services, the different risks and returns andthe internal business reporting systems.a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the

segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonablebasis have been disclosed as “Unallocable”.

b) Segment Assets and Segment Liabilities represents assets and liabilities in respective segments. Tax related assets andother assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallocable”.

(i) Primary Segment Information : (Amount in Rupees)


ACTIVITY (Unallocated)

Segment Revenue 1,820,478,859 42,081,589 — 1,862,560,448Segment Results 62,301,549 41,869,866 — 104,171,415Less: unallocated expenses netof unallocated (income) — — (11,893,685) (11,893,685)Interest expenses (Net) — — — 36,164,499Profit before tax — — — 56,113,230Depreciation and Amortisation — — — 24,509,813Non cash expenses other thanDepreciation and Amortisation — — — —Segment Assets 1,891,142,999 779,261,459 110,828,475 2,781,232,933Segment Liabilities(excluding Shareholders’ Funds) 934,137,331 — 34,286,750 968,424,080

65



ACTIVITY (Unallocated)

Segment Revenue 2,140,891,083 22,493,734 17,120 2,163,401,937Segment Results (38,887,085) 20,674,041 — (18,213,044)Less: unallocated expenses netof unallocated (income) — — (10,563,243) (10,563,243)Interest expenses (Net) — — — 31,233,948Profit before tax — — — (60,010,234)Depreciation and Amortisation — — — 32,723,791Non cash expenses other thanDepreciation and Amortisation — — — —Segment Assets 2,222,786,907 517,585,501 206,306,338 2,946,678,746Segment Liabilities(excluding Shareholders’ Funds) 1,154,215,056 — 4,186,473 1,158,401,529

As per Accounting Standard (AS) 17 “ Segment Reporting” , the Company has reported segment information onconsolidated basis including business conducted through subsidiaries and associates.The Company has identified Geographic segments as its Secondary SegmentSecondary segmental reporting is based on the geographical location of the customers. The geographical segmentshave been disclosed on revenues within India (Sales to Customers in India) and revenues outside India (Sales toCustomers outside India).

(ii) Secondary Segment Information :1. Segment Results :

PARTICULARS 2009-10 (Rs.) 2008-09 (Rs.)Within India 1,762,339 (76,218,223)Exports Outside India 60,539,210 37,331,138

Total Revenue 62,301,549 (38,887,085)

As at As at2. Segment Assets : 31.03.2010 (Rs.) 31.03.2009 (Rs.)

Within India 5,818,870 19,661,985Exports Outside India 1,885,324,129 2,203,124,922

Total Assets 1,891,142,999 2,222,786,907

3. Segment Liabilities :Within India — 1,586,500Exports Outside India 934,137,331 1,152,628,556

Total Liabilities 934,137,331 1,154,215,056

16 Goodwill on ConsolidationThe excess cost of investment over the net book value of the assets on the date of acquisition is treated as purchasedgoodwill. On consolidation, such goodwill has been amortised over a period of five years.

17 The Deferred Tax Assets comprise of the following : As at As at31.03.2010 (Rs.) 31.03.2009 (Rs.)

Deferred Tax Liability related to Fixed Assets 47,369 228,736

Deferred Tax Assets related to Fixed Assets 2,092,569 1,543,840

Deferred Tax Assets related to Carried Forward Depreciation — 4,504,728Deferred Tax Assets related to Gratuity & Leave Encashment 13,762,555 750,668

Signatures to the Schedules 1 to 16 forming part of the Consolidated Financial Statements.




66

Diagold Designs Limited

DIRECTORS' REPORTTo,The MembersYour Directors hereby present their 10th Annual Report onthe affairs of the Company together with the AuditedStatement of Accounts for the year ended 31st March, 2010.FINANCIAL RESULTS: (Rupees in Lacs)

Year ended Year ended31-03-2010 31-03-2009

Sales for the year 4852.04 5539.33

Profit/(Loss) beforeInterest, Depreciation and Tax 27.61 (59.56)Less : Interest andFinance Charges 197.33 157.79Profit/(Loss) beforeDepreciation and Tax (169.72) (217.35)Less: Depreciation 39.99 43.54

Profit/(Loss) before Taxation (209.71) (260.89)Less: - Provision for Taxation — —

- Provision for FringeBenefit Tax 0.28 1.73

- Provision for Wealth Tax 0.13 —- Prior Period Expenses 0.15 —- Provision for Deferred

Tax (Assets)/Liability (7.08) (5.82)- Short/(Excess) Provision

for Tax of earlier years 5.67 (25.96)Profit/(Loss) after Taxation (208.86) (230.84)Add: Balance brought forward 1167.75 1398.59Profit/(Loss) Available forAppropriation 958.89 1167.75APPROPRIATION:Interim Dividend Nil NilTax on Interim Dividend Nil NilFinal Dividend Nil NilTax on Final Dividend Nil NilGeneral Reserve Nil NilBalance Carried to Balance Sheet 958.89 1167.75

OPERATION:The Sales during the year ended 31st March, 2010 decreasedfrom Rs.5539.33 lacs to Rs.4852.04 lacs reflecting a declineof 12.41% over the previous year. The same was due torecession in the International Market. Other Incomeamounted to Rs.11.62 lacs compared to Rs.12.22 lacs inthe previous year.The Company is registered as 100% Export Oriented Unit(EOU) with the Development Commissioner, SEEPZ,Mumbai and the income tax liability has been worked outaccordingly.The Company during the year under review formed a LimitedLiability Partnership Firm in the name and style of TEMPLEDESIGNS LLP to carry on the manufacturing and tradingactivities in the Local market. Initial contribution of theCompany to the Capital of the firm was 95%. At presentholding of the Company in the said firm is 51%.The Company decided to exit from the Joint Venture in theRussian Subsidiary Company ‘000 Tiara Jewels’ and jointventure partner has agreed to buy the Company’s Investment

at par. All the legal formalities for transfer of shares areexpected to be completed in the current financial year.The Company during the year under review acquired smallstake in ‘Goldiam HK Ltd.’, a Company incorporated inHong Kong.RIGHT ISSUE:The Company issued and allotted 78,429 equity shares ofRs.10/- each at the Premium of Rs.120/- per share toMembers on Right Basis on 7th November, 2009 to meet theworking capital requirements of the Company.DIVIDEND:As the Company has incurred a loss of Rs.208.86 Lacs, yourdirectors regret their inability to recommend any dividendfor the year under report.DEPOSITS:The Company has not accepted any deposits from the publicduring the year under review. There has not been anyunclaimed or unpaid deposit as on 31st March 2010.DIRECTORS’ RESPONSIBILITY STATEMENT:Pursuant to the requirement under Section 217(2AA) of theCompanies Act, 1956, with respect to Directors’Responsibility Statement, it is hereby confirmed:(i) That in the preparation of the accounts for the financial

year ended 31st March, 2010, the applicable accountingstandards have been followed along with explanationrelating to material departures;

(ii) That the Directors have selected such accountingpolicies and applied them consistently and madejudgments and estimates that were reasonable andprudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial yearand of the profit/loss of the Company for the year underreview;

(iii) That the Directors have taken proper and sufficient carefor the maintenance of adequate accounting record inaccordance with the provisions of the Companies Act, 1956for safe guarding the assets of the Company and forpreventing and detecting fraud and other irregularities.

(iv) That the Directors have prepared the accounts for thefinancial year ended 31st March, 2010 on a going concern’basis.

AUDITORS:The Auditors of the Company, M/s. PULINDRA PATEL &CO., Chartered Accountants, have furnished their eligibilitycertificate required under section 224(1-B) of the CompaniesAct, 1956. The Board recommends their re-appointment tillthe conclusion of the next Annual General Meeting.SECRETARIAL COMPLIANCE CERTIFICATE:Secretarial Compliance Certificate of M/s. R. N. Shah &Associates, Company Secretaries, as required under Section383A of the Companies Act, 1956 is annexed herewith andforms part of this report.DIRECTORS:As per Article 128 of the Articles of AssociationMr. Nirav M. Mehta, Director retires by rotation at theTenth Annual General Meeting and being eligible, offerhimself for re-appointment.Mr. Rajesh G. Kapadia resigned as Director with effect from17th March, 2009 due to his personal commitment for otherworks. The Board has placed on record appreciation of hisservices to the Company.

67


ANNEXURE FORMING PART OF THE

DIRECTORS' ’’ REPORTANNEXURE - I

FORM BForm for disclosure of particulars with respect to TechnologyAbsorption, Research and Development (R & D) as per theCompanies (Disclosure of the Particulars in the Report of theBoard of Directors) Rules, 1988.1) Specific Area in which R & D is carried out by the

CompanyThe company is always looking at newer technologies tomanufacture diamond studded gold Jewellery, fusionbetween lost wax casting + process + stamping +Jewellery. This type of Jewellery is now appealing in theinternational markets.

2) Benefits derived as a result of the above R & DFrom the fusion the Company has achieved a much highervolume of sales and hopes to achieve better margins inthe coming years. It also gives our customers the leadingedge over their competitors as this type of Jewellery isnot produced by all.

3) Future Plans of ActionThe Company’s proposal to enhance manufacturing andmarketing of Gold Studded Jewellery, which is expectedto have growing demand in the International Market, inthe years to come, is still under way.

Mr. Ajay M. Khatlawala has been appointed as an AdditionalDirector on 28th May, 2010, who being Independent Directornominated by the Company’s Holding Company – GOLDIAMINTERNATIONAL LTD. Mr. Ajay. M. Khatlawala beingeligible offers himself for appointment as DirectorCONSERVATION OF ENERGY, TECHNOLOGYABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO:As required under the Companies (Disclosure of Particularsin the Report of the Board of Directors) Rules, 1988, theinformation is furnished herein below:A. CONSERVATION OF ENERGY:

As the Gems & Jewellery industry is not covered by theSchedule prescribed by the said Rules, disclosure ofparticulars on conservation of energy is not applicableto the Company.

B. TECHNOLOGY ABSORPTION:The particulars regarding absorption of technology areannexed in the prescribed Form B of the Companies(Disclosure of the Particulars in the Report of Board ofDirectors) Rules, 1988.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:The Company’s main line of business is themanufacturing and export of Gold Studded Jewellery.The Company has achieved Export Turnover ofRs. 469,821,727/- in the year under review.

Total Foreign Exchange Earned: Rs.476,041,350/-(Previous Year Rs. 595,518,044/-)Total Foreign Exchange Used: Rs.247,116,010/-(Previous Year Rs. 224,069,748/-)PARTICULARS OF EMPLOYEES:None of the employees have received remuneration/salary

exceeding the limit as stated in Section 217(2A) of theCompanies Act, 1956 read with the Companies (Particularsof Employees) Rules, 1975 as amended by the Companies(Amendment) Act 1988.ACKNOWLEDGEMENTS:Your Directors take this opportunity to place on record theirappreciation and sincere gratitude to Central Government,Government of Maharashtra, Local Authorities and Bankersto the Company for their valuable support and look forwardto their continued co-operation in the years to come.Your Directors acknowledge the support and co-operationof all those who have helped in the day-to-day management.SUBSIDIARY COMPANY:The Company’s subsidiary in Moscow, OOO Tiara Jewelsoperating business of Wholesale trade of Jewellery inMoscow, which is being retailed in India through theCompany’s retail outlets. As per the provision of Section 212(1) of the Companies Act, 1956 copies each of the BalanceSheet, Profit & Loss Account, and Report of the Board ofDirectors and the Report of the Auditors of the SubsidiaryCompany M/s. OOO Tiara Jewels are attached to this AnnualReport. Pursuant to Accounting Standard AS-21 issued bythe Institute of Chartered Accountant of India, consolidatedFinancial Statement is also attached. The turnover and profitsof the subsidiary are given below:

Subsidiary Turnover Profit / (Loss)(Rs.) (Rs.)

‘OOO Tiara Jewels’ 2,395,063 365,147

BY ORDER OF THE BOARD

Place : Mumbai (MANHAR R. BHANSALI)Date : 28th May, 2010 (CHAIRMAN)

4) Expenditure on R & DAs stated above the R & D is a continuous process andthe expenditure is not specifically earmarked for the sameand whatever expenditure is there is debited to the generalmanufacturing expenses:Capital Recurring NILTotal R & D Expenditure as % to total turnover N. A.

Technology absorption, adaptation and innovation:1) Efforts in brief made towards absorption, adoptions and

innovation:With the introduction of in visual Setting in DiamondStudded Jewellery and Princess Cut Diamond GroovingMachinery, the Company has enhanced its export potentialand value addition.

2) Benefits derived as a result of the above efforts, e.g.Product improvement, cost reduction, productdevelopment, import substitution, etc.

3) In case of Imported Technology (imported during the last5 years reckoned from the beginning of the Financial Year),following information may be furnished;

Technology imported ) The Company has notYear of Import ) imported anyHas Technology been fully ) Technology since itsabsorbed, and If it is not fully ) formation.absorbed, areas, where this has )not taken place, reasons thereof )and future plan of action )

68


COMPLIANCE CERTIFICATE

To,The MembersDIAGOLD DESIGNS LIMITED

We have examined the registers, records, books and papersof DIAGOLD DESIGNS LIMITED (the Company) asrequired to be maintained under the Companies Act, 1956(the Act) and the rules made there under and also theprovisions contained in the Memorandum and Articles ofAssociation of the Company for the financial year endedon 31st March, 2010. In our opinion and to the best of ourinformation and according to the examinations carried outby us and explanations furnished to us by the Company,its Officers and agents, we certify that in respect of theaforesaid financial year:

1. The Company has kept and maintained all registersas stated in Annexure ‘A’ to this certificate, as per theprovisions and the rules made there under and allentries therein have been duly recorded.

2. The Company has duly filed the forms and returns asstated in Annexure ‘B’ to this certificate, with theRegistrar of Companies, Regional Director, CentralGovernment, Company Law Board or other authoritiesnot within the time prescribed under the Act and therules made there under.

3. The Company being a Public Limited Company hasthe minimum prescribed paid-up capital.

4. The Board of Directors duly met 10 times on2nd April, 2009, 27th April, 2009, 19th June, 2009,15th July, 2009, 25th August, 2009, 5th September, 2009,9th October, 2009, 7th November, 2009, 12th January, 2010and 17th March, 2010 in respect of which meetingsproper notices were given and the proceedings wereproperly recorded and signed including the circularresolutions passed in the Minutes Book maintainedfor the purpose.

5. The Company was not required to close its Registerof Members, and/or debenture holders during thefinancial year.

6. The Annual General Meeting for the financial yearended 31st March, 2009 was held on 31st July, 2009after giving due notice to the members of the Companyand the resolutions passed there at were duly recordedin the Minutes Book maintained for the purpose.

7. No extra-ordinary general meeting was held during thefinancial year.

8. The Company has not advanced any loan to itsdirectors or persons or firms or Companies referred inthe section 295 of the Act.

9. The Company has duly complied with the provisionsof section 297 of the Act in respect of contractsspecified in that section.

10. The Company has made necessary entries in theregister maintained under section 301 of the Act.

11. As there were no instances falling within the purviewof section 314 of the Act, the Company has notobtained any approvals from the Board of directors,members or the Central Government as the casemay be.

12. The Company has not issued any duplicate sharecertificates during the year.

13. The Company has:

(i) delivered all the certificates on allotment ofsecurities and on lodgment thereof for transfer/transmission or any other purpose in accordancewith the provisions of the Act;

(ii) not deposited any amount in separate bankaccount as no dividend was declared during thefinancial year;

(iii) not posted warrants for dividends to any membersof the Company as no dividend was declaredduring the financial year;

(iv) not transferred any amounts in to InvestorEducation and Protection Fund as there was noamounts in unpaid dividend account, applicationmoney due for refund, matured deposits, matureddebentures and the interest accrued thereonwhich have remained unclaimed or unpaid for aperiod of seven years.

(v) The Company has duly complied with therequirements of section 217 of the Act.

14. The Board of Directors of the Company is dulyconstituted and the appointment of directors, additionaldirectors, alternate directors and directors to fill casualvacancies have been duly made.

15. The Company has appointed Managing Director andWhole-time directors in compliance with the provisionsof Section 269 read with Schedule XIII to the Act.

16. The Company has not appointed any sole sellingagents during the financial year.

17. The Company was not required to obtain approvals ofthe Central Government, Company Law Board,Regional Director, Registrar or such other authoritiesas prescribed under the various provisions of the Act.

18. The directors have disclosed their interest in otherfirms/companies to the Board of Directors pursuantto the provisions of the Act and the rules made thereunder.

19. The Company has issued 78,429 Equity Shares duringthe financial year and complied with the provisions ofthe Act.

20. The Company has not bought back any shares duringthe financial year.

69


21. There was no redemption of Preference shares ordebentures during the financial year.

22. There was no transaction necessitating the Companyto keep in abeyance the rights to dividend, right sharesand bonus shares pending registration of transfer ofshares.

23. The Company has not invited/accepted any depositsincluding any unsecured loans falling with the purviewof Section 58A during the financial year.

24. The amount borrowed by the Company from directors,members, public, financial institutions, banks andothers during the financial year ending 31st March, 2010is within the borrowing limits of the Company and thatnecessary resolutions as per section 293(1)(d) of theAct have been passed in duly convened at the GeneralBody meeting of the Company.

25. The Company has made loans and advances or givenguarantees or provided securities to other bodiescorporate and has made necessary entries in theregister kept for the purpose.

26. The Company has not altered the provisions of theMemorandum with respect to situation of theCompany’s registered office from one state to anotherduring the year under scrutiny.

27. The Company has not altered the provisions of theMemorandum with respect to the objects of theCompany during the year under scrutiny.

28. The Company has not altered the provisions of theMemorandum with respect to name of the Companyduring the year under scrutiny.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of theCompany during the year under scrutiny.

30. The Company has not altered its Articles of Associationduring the financial year.

31. There was no prosecution initiated against or showcause notices received by the Company, during thefinancial year, for offences under the Act.

32. The Company has not received any money as securityfrom its employees during the financial year.

33. The Company has deposited both employees’ andemployer’s contribution towards Provident Fund duringthe financial year with prescribed authorities pursuantto Section 418 of the Act.

For R. N. SHAH & ASSOCIATESCompany Secretaries

(RAJNIKANT N. SHAH)Place : Mumbai ProprietorDate : 28th May, 2010 C. P. No. 700

Annexure A

Registers as maintained by DIAGOLD DESIGNSLIMITED:

1. Board Minutes Book u/s. 193.

2. Members Minutes Book u/s. 193.

3. Attendance Register.

4. Application for and Allotment of Shares u/s. 72.

5. Register of Members u/s. 150.

6. Register of Share Transfers u/s. 108.

7. Register of Directors, Managing Directors u/s. 303.

8. Register of Directors’ Shareholdings u/s. 307.

9. Register of Contracts u/s. 301.

10. Register of Companies and Firms in which Directorsare interested u/s. 301(3).

11. Register of Charge u/s. 143.

Annexure B

Forms and Returns as filed by DIAGOLD DESIGNSLIMITED with Registrar of Companies, RegionalDirector, Central Government or other authoritiesduring the financial year ended 31st March, 2010: -

1. Form 20B together with Annual Return dated31/07/2009 filed u/s. 159 on 21/08/2009.

2. Form 66 along with Compliance Certificate for thefinancial year ended 31/03/2009 filed u/s. 383Aon 01/08/2009.

3. Form 23AC & ACA together with Balance Sheet as on31/03/2009 and Profit and Loss Account for the yearended on that date filed u/s. 220 on 22/10/2009.

4. Form No. 2 dated 07/11/2009 filed u/s. 75(1) on14/11/2009 for allotment of 78,429 Equity Shares ofRs. 10/- each at the Premium of Rs. 120/- per shareon Right Issue.

5. Form No.32 dated 17/03/2010 filed u/s. 303(2) on19/03/2010 for resignation of Mr. Rajesh G. Kapadiaas a Director.

70


AUDITORS' ’ REPORT

TO THE MEMBERS OF DIAGOLD DESIGNS LIMITED

We have audited the attached Balance Sheet of DIAGOLDDESIGNS LIMITED as at 31st March, 2010 and also the Profitand Loss Account and the Cash Flow Statement of thecompany for the year ended on that date annexed thereto.These financial statements are the responsibility of theCompany’s management. Our responsibility is to express anopinion on these financial statements based on our audit.We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of materialmis-statement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.As required by the Companies (Auditor’s Report) Order, 2003issued by the Central Government of India in terms ofsub-section (4A) of Section 227 of the Companies Act, 1956,we enclose in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said order.Further to our comments in the Annexure referred to above,we report that:a) We have obtained all the information and explanations,

which to the best of our knowledge and belief werenecessary for the purpose of our audit;

b) In our opinion, proper books of accounts as required bylaw have been kept by the Company so far as it appearsfrom our examination of those books;

c) The Balance Sheet, Profit and Loss Account and CashFlow statement dealt with by this report are in agreementwith the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow statement dealt with by this report complywith the mandatory accounting standards referred toin Sub-Section (3C) of Section 211 of the CompaniesAct, 1956.

e) On the basis of the written representations received fromthe directors, as on 31st March, 2010 and taken on recordby the Board of Directors, we report that none of thedirectors is disqualified as on 31st March, 2010, from beingappointed as director in terms of clause (g) of sub-section 1of Section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true andfair view in conformity with the accounting principlesgenerally accepted in India;i) in the case of Balance Sheet, of the state of affairs

of the Company as at 31st March, 2010; ii) in the case of Profit and Loss Account, of the Loss

of the Company for the year ended on that date;and

iii) in the case of Cash Flow Statement, of the cashflows of the year ended on that date.


(Pulindra Patel)Place : Mumbai ProprietorDate : 28th May, 2010. Membership No. 48991

ANNEXURE REFERRED TO IN 3RD PARAGRAPH

OF OUR REPORT OF EVEN DATE1. (a) The Company has maintained proper records showing

full particulars, including quantitative details andsituation of fixed assets. All fixed assets have beenphysically verified by the management during the yearbut there is a regular programme of verification which,in our opinion, is reasonable having regard to the sizeof the Company and the nature of its assets. Accordingto the information and explanations given to us, nomaterial discrepancies were noticed on suchverification.

(b) There was no substantial disposal of fixed assetsduring the year.

2. a) As explained to us, the management has conductedphysical verification of inventory at reasonableintervals.

b) In our opinion and according to the information &explanations given to us, the procedure of physicalverification of inventories followed by the managementare reasonable and adequate in relation to the size ofthe Company and the nature of its business.

c) In our opinion and according to the information &explanations given to us, the Company has maintained

proper records of inventory and no materialdiscrepancies were noticed on physical verification.

3. a) According to the information and explanations givento us, the company has grated loans to two parties ofwhich one is wholly owned subsidiary company,covered in the registered maintained undersection 301 of the Act. The maximum amount involvedduring the year was Rs.3,821,250/- and year endbalance of the loans granted was Rs.3,272,835/-.

b) In our opinion and according to the information andexplanations given to us, the rate of interest and otherterms and conditions for such loans are not prima facieprejudicial to the interest of the company.

c) In respect of loans granted, repayment of the principalamount is as stipulated and payment of interest hasbeen regular.

d) There is no overdue amount of loans granted tocompanies, listed in the register maintained undersection 301 of the Companies Act, 1956.

e) According to the information and explanations givento us, the Company has not taken unsecured loansfrom parties covered in the register maintained undersection 301 of the Companies Act, 1956. Accordingly,the provisions of clause 4(iii) (f) to (g) of the order arenot applicable.

71


4. In our opinion and according to the information andexplanations given to us, there are adequate internalcontrol procedures commensurate with the size of theCompany and the nature of its business, for the purchaseof inventory and fixed assets and for the sale of goodsand service. During the course of our audit, no majorweakness has been noticed in the internal controls.

5. (a) According to the information and explanations given tous, the transactions that need to be entered into the registermaintained under section 301 have been so entered.

(b) In our opinion and according to the information andexplanations given to us, these contracts orarrangements have been made at prices which arereasonable having regard to the prevailing marketprices at the relevant time.

6. The Company has not accepted any deposits from the public.7. In our opinion, the company has an internal audit system

commensurate with the size and nature of its business.8. We have been informed that the Central Government

has not prescribed maintenance of cost records undersection 209(1) (d) of the Companies Act, 1956.

9. According to the records of the Company, the Company isregular in depositing undisputed statutory dues includingProvident Fund, Investor Education and Protection Fund,Employees’ State Insurance, Income-tax, Sales-tax,Customs Duty, Excise Duty, cess and other statutory duesapplicable to it with the appropriate authorities. Accordingto the information and explanations given to us, noundisputed amounts payable in respect of Income tax,Sales tax, customs duty and excise duty were outstandingat the year end for a period of more than six months fromthe date they became payable,:According to the records of the Company, there are nodues outstanding of sales tax, income tax, customs duty,wealth tax, and cess on account of any dispute.According to the records of the Company, disputed IncomeTax Liability not deposited on account of dispute is as follows:

Name of Statute/ Amount Rs. Period Forum whereDescription to which dispute is

the amount pendingrelates

Income Tax 5,76,924/- A.Y. 2004-05 CommissionerA.Y.2004-05 of Income Tax

Appeals.

10. The Company has no accumulated losses at the end ofthe financial year and it has incurred cash losses in thecurrent and has incurred cash losses in the immediatelypreceding financial year.

11. Based on our audit procedures and on the information andexplanations given by the management, we are of theopinion that the company has not defaulted in repaymentof dues to banks. The Company does not have anyborrowings by way debentures.

12. The Company has not granted any loans and advanceson the basis of security by way of pledge of shares,debentures and other securities.

13. In our opinion and according to the information andexplanations given to us, the nature of activities of theCompany does not attract any special statue applicableto chit fund and nidhi / mutual benefit fund societies.

14. In respect of dealing in shares, debentures, securities andother investments, in our opinion and according to theinformation and explanations given to us, proper recordshave been maintained of the transactions and contractsand timely entries have been made therein. The shares,securities, debentures and other investments have beenheld by the Company in its own name.

15. According to the information and explanations given to us, theCompany has not given any guarantee for loans taken by itssubsidiaries and associates from banks or financial institutions.


17. According to the information and explanations given to usand on an overall examination of the balance sheet of thecompany, we report that no funds raised on short-termbasis have been utilized for long-term investment, thoughsurplus funds which were not required for immediateutilization have been gainfully invested in Shares.

18. As per the information and explanations given to us theCompany has made preferential allotment of shares duringthe year to the parties or companies covered in the registermaintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year.20. The Company has not raised any money through a public

issue during the year.21. Based upon the audit procedures performed for the purpose

of reporting the true and fair view of the financial statementsand as per the information and explanations given by themanagement, we report that no fraud on or by the Companyhas been noticed or reported during the course of our audit.


(Pulindra Patel)Place : Mumbai ProprietorDate : 28th May, 2010. Membership No. 48991

72


BALANCE SHEET AS ON 31ST MARCH, 2010As on As on

31.03.2010 31.03.2009Sch No. Rupees Rupees Rupees

I SOURCES OF FUNDS: 1 SHAREHOLDERS FUND:

a) SHARE CAPITAL 1 39,999,290 39,215,000 b) RESERVES AND SURPLUS 2 210,988,526 222,462,922

250,987,816 261,677,9222 LOAN FUNDS : a) SECURED LOANS 3 196,007,540 139,934,137 b) UNSECURED LOANS 4 — 70,779,718

196,007,540 210,713,855

TOTAL Rs. 446,995,356 472,391,777

II APPLICATION OF FUNDS: 1 FIXED ASSETS 5 GROSS BLOCK 119,347,333 117,541,376 LESS : DEPRECIATION 41,763,595 38,977,809

NET BLOCK 77,583,738 78,563,5672 INVESTMENTS 6 9,472,068 1,252,2773 DEFERRED TAX ASSETS 1,736,180 1,028,455 (See Schedule 18 Note No. 20)4 CURRENT ASSETS, LOANS AND ADVANCES 7 a) INVENTORIES 242,996,719 157,916,810 b) SUNDRY DEBTORS 263,928,671 272,729,047 c) CASH AND BANK BALANCES 7,666,551 18,682,420 d) LOANS AND ADVANCES 14,067,425 17,371,482

528,659,365 466,699,759

5 CURRENT LIABILITIES AND PROVISIONS 8 a) CURRENT LIABILITIES 170,290,710 82,359,464 b) PROVISIONS 165,286 152,376

170,455,995 82,511,840

NET CURRENT ASSETS 358,203,370 384,187,9206 MISC. EXPENDITURE 9 (To the extent not written off or adjusted) — 7,359,558 (See Schedule 18 Note No. 1 (P))

TOTAL Rs. 446,995,356 472,391,777

Contingent Liabilities (See Schedule 18 Note No.3)

NOTES ON ACCOUNTS 18

Schedule referred to above form an integral part of Balance SheetAs per our report of even date


Pulindra Patel Milan R. Mehta Nirav M. MehtaProprietor Managing Director DirectorMembership No. 048991


73



Sch No. For the year For the yearended ended

31.03.2010 31.03.2009Rupees Rupees

I INCOME : SALES 10 485,203,618 553,932,870OTHER INCOME 11 1,162,220 1,221,977INCREASE / DECREASE IN STOCK 12 (969,005) (7,004,617)PROFIT ON SALE OF FIXED ASSETS 4,477 —

TOTAL Rs. 485,401,311 548,150,230

II EXPENDITURE : COST OF MATERIALS 13 367,847,779 458,616,699PURCHASE FOR TRADING 37,873,055 —EMPLOYEES’ COST 14 15,105,207 20,072,111MANUFACTURING EXPENSES 15 12,425,093 6,054,614ADMINISTRATIVE, SELLING & OTHER EXPENSES 16 48,052,419 58,378,521INTEREST AND FINANCE CHARGES 17 19,733,223 15,778,543PRELIMINARY EXPENSES WRITTEN OFF 9 34,293 34,293DEPRECIATION 5 3,998,403 4,354,367LOSS ON SALE OF INVESTMENTS (NET) — 10,950,001SHARE OF LOSS FROM LLP 1,303,204 —

TOTAL Rs. 506,372,675 574,239,150

III PROFIT : PROFIT BEFORE TAX (20,971,365) (26,088,920)LESS : PROVISION FOR TAXATION — CURRENT TAX — —— DEFERRED TAX ASSET 707,725 582,321— FRINGE BENEFIT TAX 28,127 172,880— WEALTH TAX 12,910 —— SHORT / EXCESS PROVISION FOR TAX 566,541 2,595,635PRIOR PERIOD EXPENSES 14,658 —

PROFIT AFTER TAX (20,885,876) (23,083,844)BALANCE BROUGHT FORWARD 116,775,086 139,858,930


APPROPRIATIONS : BALANCE CARRIED FORWARD TO BALANCE SHEET 95,889,210 116,775,086

TOTAL Rs. 95,889,210 116,775,086

NOTES ON ACCOUNTS 18EARNING PER SHARE (Basic) (5.22) (5.89)EARNING PER SHARE (Diluted) (5.28) (5.89)(Face Value of Rs. 10/-) See Schedule 18 Note No. 1 (L)

Schedule referred to above form an integral part of Profit and Loss AccountsAs per our report of even date




74


CASH FLOW OF THE YEAR ENDED 31ST MARCH, 2010PARTICULARS 2009-2010 2008-2009

Rupees Rupees RupeesA) CASH FLOW FROM OPERATING ACTIVITIES:

NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS (20,971,365) (26,088,920)ADJUSTMENT FOR:Depreciation (Schedule 5) 3,998,403 4,354,367Interest 18,974,860 14,720,230Profit / (Loss) Sale of Investments — 10,950,001Profit / (Loss) Sale of Fixed Assets (4,477) —Misc. Expenditure written off 34,293 34,293Share of Loss from LLP 1,303,204 —VRS expenses written off 7,325,265 1,831,316Prior year expenses (14,658) —Short/(excess) revision for taxation written off (566,541) 2,595,635

31,050,349 34,485,84210,078,984 8,396,922

OPERATING PROFIT BEFOREWORKING CAPITAL CHANGESADJUSTMENT FOR:Trade and other Receivable 12,274,514 82,571,298Voluntary Retirement Payments — (9,156,581)Inventories (85,079,909) (9,573,783)Trade Payable 88,540,872 (116,014,956)

15,735,477 (52,174,022)CASH GENERATED FROM OPERATIONS 25,814,461 (43,777,100)Interest Paid (19,733,223) (15,778,543)Direct Tax Paid (198,207) (574,301)

(19,931,430) (16,352,844)CASH FLOW BEFORE EXTRAORDINARY ITEMS 5,883,031 (60,129,944)NET CASH FROM OPERATING ACTIVITIES

B) CASH FLOW FROM INVESTING ACTIVITIES:Purchase of Fixed Assets (3,360,763) (370,018)Purchase of Investments — (818,036)Investment in Overseas Subsidiary (9,522,995) (8,856)Sale of Investments — 16,951,239Sale of Fixed Assets 346,666 —Interest Received 758,363 1,058,313NET CASH USED IN INVESTING ACTIVITIES (11,778,729) 16,812,642

(5,895,698) (43,317,302)C) CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from Issue of Share Capital including Security premium 10,195,770 —Repayment of Long Term Borrowing (14,706,315) 42,442,229Dividend Paid — —NET CASH USED IN FINANCING ACTIVITIES (4,510,545) 42,442,229NET INCREASE IN CASH AND CASH EQUIVALENTS (10,406,243) (875,073)CASH AND CASH EQUIVALENTS AS AT 01.04.09 18,034,304 18,909,377CASH AND CASH EQUIVALENTS AS AT 31.03.10 7,628,061 18,034,304




75


SCHEDULES FORMING PART OF THE BALANCE SHEET AS ON 31ST MARCH, 2010As on 31.03.2010 As on 31.03.2009

Rupees Rupees RupeesSCHEDULE “1”SHARE CAPITAL

AUTHORISED CAPITAL :

4000000 Equity Shares of Rs.10/- each 40,000,000 40,000,000

Total Rs. 40,000,000 40,000,000

ISSUED CAPITAL : 3999929 Equity Shares of Rs. 10/- each 39,999,290 39,215,000(Previous year 3921500 Equity Shares of Rs.10/- each)

Total Rs. 39,999,290 39,215,000

SUBSCRIBED AND PAID UP CAPITAL : 3999929 Equity Shares of Rs. 10/- each 39,999,290 39,215,000(Previous year 3921500 Equity Shares of Rs.10/- each)

Total Rs. 39,999,290 39,215,000

Note : [of the above 2039658 Equity shares (Previous year 1999665)are held by Holding Company Goldiam International Limited]

SCHEDULE “2” RESERVES AND SURPLUS :1. Securities Premium 36,860,000 36,860,000

Add : Addition during the year 9,411,480 —

46,271,480 36,860,0002. Revaluation Reserve

Opening Balance 42,086,821 42,086,821

42,086,821 42,086,8213. General Reserve

Opening Balance 26,741,015 26,741,015Add : Transfer from Profit & Loss A/c — —

26,741,015 26,741,0154. Profit & Loss Account 95,889,210 116,775,086

Total Rs. 210,988,526 222,462,922

SCHEDULE “3” SECURED LOANS :Punjab National Bank P. C. (*) 52,499,286 102,221,137Punjab National Bank P.S.C. (*) 38,949,958 37,713,000Punjab National Bank P.C.F.C.(*) 71,788,387 —Punjab National Bank F.O.B.D. (*) 31,291,952 —(* Secured by hypothecation of Stock, Debtors and Equitable mortgage of Lease hold Land and Factory Building at R-1 Cama Industrial Estate, Walbhat Road, Goregaon (East), Mumbai - 400063.)HDFC Bank Car Loan I (**) 223,953 —HDFC BANK Car Loan II (**) 870,004 —HDFC BANK Car Loan III (**) 384,000 —(** Motor Car Loans is secured against Motor Cars)

Total Rs. 196,007,540 139,934,137

SCHEDULE “4” UNSECURED LOANS : Barclays Bank PLC F.O.B.D. — 70,779,718

Total Rs. — 70,779,718

76


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the

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50,6

46,8

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,821

——

——

50,6

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Fac

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Bui

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,869

——

27,7

78,8

6913

,792

,454

1,39

8,64

2—

15,1

91,0

9612

,587

,773

13,9

86,4

15

Tot

al (

A)

Rs.

78,4

25,6

90—

—78

,425

,690

13,7

92,4

541,

398,

642

—15

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,096

63,2

34,5

9464

,633

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ner

1,04

1,83

981

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—1,

123,

339

550,

916

72,8

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623,

750

499,

589

490,

923

Com

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r1,

600,

225

325,

884

—1,

926,

109

1,40

7,89

615

1,10

2—

1,55

8,99

836

7,11

119

2,32

9

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676,

180

19,2

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695,

420

642,

390

17,0

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659,

411

36,0

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231,

830

——

4,23

1,83

02,

472,

466

244,

727

—2,

717,

193

1,51

4,63

71,

759,

364

Pla

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Mac

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,997

,346

368,

274

—15

,365

,620

9,07

9,28

894

2,14

9—

10,0

21,4

375,

344,

183

5,91

8,05

8

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Fix

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s12

,349

,681

102,

677

—12

,452

,358

8,46

4,91

871

0,65

4—

9,17

5,57

23,

276,

786

3,88

4,76

3

Offi

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quip

men

t1,

888,

694

97,1

88—

1,98

5,88

287

3,90

314

5,15

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1,01

9,05

996

6,82

31,

014,

791

Veh

icle

2,32

9,89

22,

366,

000

1,55

4,80

63,

141,

086

1,69

3,57

831

6,11

81,

212,

617

797,

079

2,34

4,00

763

6,31

4

Tot

al (

B)

Rs.

39,1

15,6

873,

360,

763

1,55

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77


SCHEDULES FORMING PART OF THE BALANCE SHEET AS ON 31ST MARCH, 2010

As on 31.03.2010 As on 31.03.2009Rupees Rupees Rupees

SCHEDULE “6”INVESTMENTS :LONG TERM INVESTMENTS ( At Cost ) :TRADE INVESTMENTS :UNQUOTED :i) In Equity Shares of Joint Venture Company - Unquoted, fully paid

at cost GOLDIAM JEWELS SDN. BHD. (No. of Shares 105000Face Value of 1.00 Ringets Per Share) 1,243,421 1,243,421

ii) In Equity Shares of Joint Venture Company - Unquoted, fully paid 8,856 8,856at cost ‘OOO TIARA JEWELS (No. of Shares 5100 Face Value of 1.00 Ruble Per Share)

iii) In Equity Shares of Joint Venture Company - Unquoted, fully paid 22,995 —at cost ‘GOLDIAM HK LIMITED’ (No. of Shares 3900 Face Value of 1.00 HK Dollar Per Share)

iv) Partnership Firm with Limited Liability (LLP) holding 95% share of profit 8,196,796 —at cost ‘TEMPLE DESIGNS LLP’

Total Rs. 9,472,068 1,252,277

Aggregate Book value of all quoted Investments — —Market Value of all quoted Investments — —Aggregate Book value of all unquoted Investments 9,472,068 1,252,277

SCHEDULE “7” CURRENT ASSETS, LOANS AND ADVANCES CURRENT ASSETS :a) INVENTORIES

As taken, valued & certified by the Managementi) Stock of Consumable Stores & Spares (at cost) 939,840 1,199,951ii) Raw Materials 236,773,913 150,464,888

(at cost or net realisable value whichever is less)iii) Finished Goods (at cost or net realisable value 5,282,966 6,251,971

whichever is less)242,996,719 157,916,810

b) SUNDRY DEBTORS(Unsecured, considered good)Outstanding for a period exceeding six months 26,101,464 54,041,452Other Debts 237,827,207 218,687,595

263,928,671 272,729,047c) CASH AND BANK BALANCES

Cash on Hand 355,565 1,036,781Balance with Schedule & Unscheduled Bank in– Current Accounts 1,644,877 1,603,374– Fixed Deposit with Bank 5,666,109 16,042,264

7,666,551 18,682,420d) LOANS AND ADVANCES

(Advances recoverable in cash or in kind or for valueto be received)Loans and Advances 13,400,477 16,691,842Security & Other Deposit 666,948 679,640

14,067,425 17,371,482

Total Rs. 528,659,366 466,699,759

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As on 31.03.2010 As on 31.03.2009Rupees Rupees Rupees

SCHEDULE “8”CURRENT LIABILITIES AND PROVISIONS :a) CURRENT LIABILITIES

Sundry Creditors :Sundry Creditors 168,665,328 80,620,364Dues to Micro, Small and Medium Enterprises 752,795 591,467

169,418,123 81,211,831Overdrawn Balance with Punjab National Bank 38,490 648,116Advance from Customers 834,096 499,516

170,290,709 82,359,463b) PROVISIONS :

Provision for Current Tax 165,286 152,376 165,286 152,376

Total Rs. 170,455,995 82,511,839

SCHEDULE “9”MISCELLANEOUS EXPENDITURE :(To the extent not written off or adjusted)Preliminary expenses 34,293 68,586Less : 10% written off 34,293 34,293

— 34,293MISCELLANEOUS EXPENDITURE :(To the extent not written off or adjusted)Voluntary Retirement expenses — 9,156,581Less : written off during the year — 1,831,316

— 7,325,265

Total Rs. — 7,359,558


Rupees Rupees Rupees RupeesSCHEDULE : “10”SALES :

Export Turnover 469,821,787 553,815,140Local Turnover 4,310,927 119,485Less : VAT 42,683 1,755

4,268,244 117,730Local Turnover 11,113,587 —

485,203,618 553,932,870

Total Rs. 485,203,618 553,932,870SCHEDULE : “11”OTHER INCOME :

Discount received 5,001 —Interest on Loan 508,335 —Rent received 200,000 —Other Income 198,856 —Interest on Bank FDR (T.D.S.Rs. 65,745/- Previous Year 214,428/-) 250,028 1,058,313Dividend received — 11,946Dividend received on Mutual Fund — 134,598Sales Tax Refund — 17,120

1,162,220 1,221,977

Total Rs. 1,162,220 1,221,977

SCHEDULES FORMING PART OF THE PROFIT & LOSS A/C FOR THE YEAR ENDED 31ST MARCH, 2010

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SCHEDULE : “14”WAGES, SALARIES & OTHER BENEFITS :

Wages, Salaries Ex-Gratia & Other Payments 6,490,167 13,680,972Contribution to E.S.I.C. 115,690 468,694Contribution to Provident Fund other Funds 302,187 1,186,996Voluntary Retirement expenses written off 7,325,265 1,831,316Provision / Contribution to Group Gratuity 48,337 411,640Staff welfare expenses 823,561 661,177

15,105,207 18,240,795Total Rs. 15,105,207 18,240,795

SCHEDULE : “15” MANUFACTURING AND OTHER EXPENSES :Electricity Charges 2,347,077 2,275,291Assortment, Refining & Grooving Charges 304,321 343,365Repair & Maintenance (Machinery) 63,377 42,296Jewellery Designs 103,049 62,904Custom Overtime Charges 198,450 206,477Water Charges 79,380 83,960Labour Charges 5,594,173 —Stores & Spares Consumed 3,735,267 3,040,320

12,425,093 6,054,613Total Rs. 12,425,093 6,054,613

SCHEDULE : “16”ADMINISTRATIVE & OTHER EXPENSES :Repairs & Maintenance 1,233,989 442,990Rent, Rates & Taxes 1,005,362 892,723Audit Fees 79,416 52,395Exchange Difference Others 30,260,750 35,036,618Legal & Professional Charges 6,692,438 8,591,855Office & Miscellaneous expenses 2,057,676 2,159,855Travelling expenses 1,840,549 3,022,876Selling & Distribution expenses 4,882,239 7,912,148Portfolio Management Fees — 244,926Securities Transactions Tax — 22,135

48,052,419 58,378,521Total Rs. 48,052,419 58,378,521

SCHEDULE : “17” INTEREST & FINANCE CHARGESBank Charges 5,905,512 4,294,483Interest on Bank Loan 13,666,605 11,347,840Stamp Duty 161,106 136,220

19,733,223 15,778,543Total Rs. 19,733,223 15,778,543


Rupees Rupees Rupees RupeesSCHEDULE : “12”INCREASE / (DECREASE) IN STOCK :

Closing Stock :Finished Goods 5,282,966 6,251,971

5,282,966 6,251,971Less : Opening StockFinished Goods 6,251,971 13,256,588

6,251,971 13,256,588

Total Rs. (969,005) (7,004,617)

SCHEDULE : “13”RAW MATERIALS CONSUMED :

Opening Stock of Raw Materials 150,464,888 133,437,828Add : Purchase of Raw Materials (includes 454,156,804 475,643,760Import Exchange Difference Loss Rs.10812951/-)Previous Year Gain Rs.1,09,24,586/-) 604,621,692 609,081,588Less : Closing Stock of Raw Materials 236,773,913 150,464,888

367,847,779 458,616,700

Total Rs. 367,847,779 458,616,700

80


SCHEDULE: 18 FINANCIAL YEAR 2009-2010

NOTES ATTACHED TO AND FORMING PART OF THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES :

A) BASIS OF PREPARATION OF ACCOUNTS:The financial statements have been prepared and presented under historical cost convention on the accrualbasis of accounting and comply with the Accounting Standards as specified in the Companies (AccountingStandard) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and therelevant provisions of the Companies Act, 1956, to the extent applicable. The financial statements have beenprepared under historical cost convention on an accrual basis except in case of assets for which provision forimpairment is made and revaluation is carried out in prior year.

B) USE OF ESTIMATES:The preparation of financial statements in conformity with generally accepted accounting principles (GAAP)requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent liabilities at the date of financial statements and reported amounts ofrevenue and expenses for the year. Although these estimates are based upon management ‘s best knowledgeof current events and actions, actual result could differ from these estimates.

C) FIXED ASSETS:Tangible Fixed Assets (excluding Land & Building) are stated at cost of acquit ion or construction (Net of VAT,wherever applicable). They are stated at historical cost less accumulated depreciation and Impairment loss.Land and Building has been revalued at market value as on 31.03.2007. Difference in market value and historicalcost has been transferred to revaluation reserve account as on 31.03.2007.

D) DEPRECIATION:Depreciation on Fixed Assets is provided on “Written Down Value” method and at the rates prescribed inSchedule XIV of the Companies Act, 1956. Depreciation on addition to fixed assets is provided on prorata basisfrom the date of acquisition or installation. Depreciation on assets sold, discarded, demolished or scrapped, isprovided upto the month in which the said assets is sold, discarded, demolished or scrapped.

E) IMPAIRMENT OF ASSETS:(i) The carrying values of assets are reviewed at each Balance Sheet date for indicators of impairment based

on internal / external factors. An Impairment loss is recognised wherever the carrying amount of an assetexceeds its recoverable amount.

(ii) After Impairment, depreciation is provided on the revised carrying amount of the assets.

(iii) A previously recognised impairment loss is increased or reversed depending on changes in circumstances.However, the carrying value after reversal is not increased beyond the carrying value that would haveprevailed by charging usual depreciation if no impairment loss had been recognised.

F) INVENTORIES :(i) Raw materials (Including work- in - progress) are valued at cost or net realisable value, whichever is lower,

on first in first out basis.

(ii) Stores and Spares are valued at cost on first in first out basis.

(iii) Cost of finished goods comprises of direct material, conversion cost and all other cost incurred in bringingmaterial to its present location and are valued at cost or net realisable value whichever is lower. Tradinggoods are valued at cost or net realisable value, whichever is lower.

G) FOREIGN CURRENCY TRANSACTIONS:a. Investments in foreign entity are recorded at the exchange rate prevailing on the date of investment.

Transactions in foreign currency are recorded at the exchange rate prevailing at the date of the transaction.Exchange differences arising on foreign currency transactions settled during the year are recognised in theProfit and Loss Account. Monetary assets and liabilities denominated in foreign currencies, as at the balancesheet date, not covered by forward exchange contracts are translated at year end rates.

b. Monetary items which are covered by forward exchange contracts, the difference between the year endrate and rate on the date of the contract is recognised as exchange difference and is recognised over thelife of the contract.

c. The Company uses foreign exchange forward contracts and options to hedge its exposure to movementsin foreign exchange rates. These foreign exchange forward contracts and options are not used for tradingor speculation purpose. Any profit or loss arising on cancellation or renewal of forward foreign exchangecontracts is recognised as income or expense for the year. In respect of foreign currency option contracts

81


which are entered into to hedge highly probable forecasted transactions the cost of these contracts, if any,is expensed over the period of the contract. Any profit or loss arising on settlement or cancellation ofcurrency options is recognised as income or expense for the period in which settlement or cancellationtakes place. The effect of these currency option contracts outstanding at the year-end, in the form ofunrealised gains/losses, is recognised

H) INVESTMENTS:Investments that are intended to be held for more than a year, from the date of acquisition are classified LongTerm Investments and are stated at cost. Provision for diminution in value of Long-Term investments is made,if the diminution value is other than temporary.

I) REVENUE RECOGNITION:Revenues/Incomes and Cost/Expenditures are generally accounted on accrual basis as they are earned orincurred.

Sales:Domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basisof dates of Airway Bills. Domestic Sales are disclosed net of Value Added Tax, discounts and returns as applicable.

Dividend:Dividend Income is recognised when the right to receive the income is established.

Interest:Interest income is recognised on a time proportion basis taking into account the amount outstanding and therate applicable.

J) EMPLOYEE BENEFITS:i) Defined Contribution Plan :

Defined Contribution plans of the company comprise of Provident Fund and Pension plans.

Employee benefits in the form of contribution to Provident Fund managed by Government authorities,Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contributionplan and the contributions are charged to the Profit and Loss Account of the year when the contributions tothe respective funds are due

ii) Defined Benefit Plan :

Retirement benefits in the form of Gratuity benefit is considered as defined benefit obligation and isprovided for on the basis of an actuarial valuation.

Gratuity:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligibleemployees. The plan provides for payment to vested employees at retirement, death while in employmentor on termination of employment of an amount based on the respective employee’s salary and the tenure ofemployment. Vesting occurs upon completion of given years of service. The company makes annualcontributions to group gratuity fund established by Life Insurance Corporation of India.

K) RESEARCH AND DEVELOPMENT EXPENDITURE:Revenue expenses on Research & Development are charged to the Profit & Loss Account in the year in whichthese are incurred. Capital expenditure is taken as addition to the fixed assets.

L) EARNING PER SHARE:Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholdersby the weighted average number of equity shares outstanding during the year. For the purpose of calculatingdiluted earnings per share, the net profit or loss attributable to equity shareholders and the weighted averagenumber of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

M) PROVISION FOR CURRENT AND DEFERRED TAX:Tax expenses comprise of Current, Deferred tax and Fringe benefit taxes.Provision for Fringe benefit tax is determined in accordance with the provisions of section 115WC of the IncomeTax Act, 1961.The Company is eligible for exemption u/s 10B of the Income Tax Act, 1961 and therefore Current Tax Provisionhas been made accordingly.Deferred income tax reflects the impact of current year timing differences between taxable income / losses andaccounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured onthe tax rates and tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assetsare recognized only to the extent that there is reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realized. In respect of carry forward losses deferred tax

82


assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will beavailable against which such losses can be setoff.

N) SEGMENT INFORMATION:The Company has two segments i.e Jewellery Manufacturing & Investment Activity.

O) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:A Provision is created when an enterprise has a present obligation as a result of past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount and it is probable that anoutflow of resources will be required to settle the obligation. A disclosure for contingent liability is made whenthere is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resourcesis remote, no provision or disclosure is made.

The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisabilityof such assets. However, if it has become virtually certain that an inflow of economic benefits will arise, assetsand related income is recognized in the financial statements of the period in which the change occurs.

P) MISCELLANEOUS EXPENDITURE:Expenses included under the head “Miscellaneous Expenditure” are Preliminary expenses and VoluntaryRetirement payments. Preliminary expenses to be written off over the period of five years in equal installments.A Voluntary Retirement Scheme was announced in the last quarter of the previous year. In accordance withtransactional provision contained in Accounting Standard 15, the Company has chosen to amortize such expensesin equal quarterly installments over a period ending on 31st March, 2010. A sum of Rs.7,325,265/- has beencharged to profit & loss account in the current year.

2. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF :(a) The Company has outstanding performance guarantee of Rs.8,993,404/- as on the Balance sheet date executed

in favour of Assistant Commissioner of Customs ( Previous year Rs.4,748,052/-)(b) In respect of Joint Venture: No Contingent Liability.(c) The company has demand in respect of Income Tax Rs. 576,924/- for the Assessment Year 2004-2005 and

Rs. 515,579/- for the Assessment Year 2006-2007 (Previous Year Rs. Nil )

3. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for Rs.nil.(Previous year Rs.nil.)

4. IN THE OPINION OF THE DIRECTORS:(a) The Current Assets and Loans & Advances are approximately of the value stated, if realised in the ordinary

course of business.(b) The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably

necessary.

5. PARTICULARS IN RESPECT OF LICENSED CAPACITY, INSTALLED CAPACITY AND ACTUAL PRODUCTION

Class of Goods Licensed Capacity Installed Capacity Actual ProductionManufactured 2009-10 2008-09

Jewellery (Gms.) N.A. N.A. 84,194.60 114,626.42

6. JOINT VENTURE:In compliance with the Accounting Standard relating to Financial Reporting of interest in Joint Venture’ (AS-27),issued by the Institute of Chartered Accountants of India, the Company has interests in the following jointly controlledentity, which is incorporated outside India.

Name of the Company Incorporated in For the Period ended For the Period ended30th September, 2009 30th September, 2008

Goldiam Jewels SDN BHD Malaysia 30.00% 30.00%

For the Period ended For the Period ended30th September, 2009 30th September, 2008

Proportionate Reserves and Surplus as at the beginning of the year (487,986) (401,655)Proportionate Transfer to Reserves — —Proportionate surplus / (deficit) in Profit and Loss Account (48,500) (86,331)(net of transfer to reserves, dividend etc.)Proportionate Reserves and Surplus as at the end of the year (536,486) (487,986)

83


Name of the Company Percentage For the Period ended For the Period ended& Country of of Share 30th September, 2009 30th September, 2009Incorporation holdings %

Assets Liabilities Income ExpenditureRupees Rupees Rupees Rupees

Goldiam Jewels SDN BHD, Malaysia 30% 930,826 79,239 — 48,500

7. DETAILS OF RELATED PARTIES TRANSACTIONS ARE AS UNDER.

1) List of related parties and relationship

Relationship Name of the Related Parties

Holding Company Goldiam International LimitedSubsidiary OOO Tiara JewelsJoint Venture / Associates Temple Designs LLP

Goldiam Jewels SDN BHD

Enterprise over which Key Managerial Goldiam HK LimitedPersonnel has direct control

Key Management Personnel Mr. Manhar R. Bhansali ChairmanMr. Milan R. Mehta Managing DirectorMr. Nirav M. Mehta Whole Time DirectorMr. Rashesh M. Bhansali Director

Relatives of Key Management Personnel Mrs. Shobhana Bhansali Wife of Mr. Manhar R. BhansaliMrs. Trupti Mehta Wife of Mr. Milan R. MehtaMrs. Sweta Mehta Wife of Mr. Nirav M. MehtaMr. Nehal M. Mehta Son of Mr. Milan R. Mehta

2) Transaction during the year with related parties:

Sr. Nature of Transaction Holding Company Subsidiary Company Key Management Enterprises over whichNo. Personnel Key Management

personnel havingdirect control

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

i) Directors remuneration — — — — 50,000 80,000 — —ii) Reimbursement made towards expenses — — — — — — 198,856 —iii) Issue of Equity Shares 51,99,090 — — — 4,996,680 — — —iv) Purchase of Investments — — — 8,856 — — 22,995 —v) Investment in Limited Liability Partnership Firm — — — — — — 9,500,000 —vi) Loans given — — 2,764,500 3,821,250 — — —vii) Interest on Loan given — — 508,335 — — — — —viii) Share of Loss from LLP — — — — 1,303,204 — — —ix) Sale of goods 11,168,377 118,909 — — — 45,384,785 — —x) Rent received — — — — — — 2,00,000 —xi) Purchase of goods — — — — — — 38,873,985 58,549,728

a) Outstanding Loan given as on 31st March — — — — — — — —b) Outstanding Receivables as on 31st March 19,319 118,909 3,272,835 3,821,250 — — 42,945,453 —c) Outstanding Payables as on 31st March — — — — — — — 12,448,691

84


3) Disclosure in respect of Transaction with related parties during the year

Sr. Nature of Holding Subsid- Key Management Enterprises overNo. Transaction Company iary Personnel which Key Manag-

Com- ement Personnelpany have direct control

Goldiam OOO Rashesh Manhar Shobhana Milan Trupti Nirav Sweta Nehal Temple GoldiamInternational Tiara Bhansali Bhansali Bhansali Mehta Mehta Mehta Mehta Mehta Designs HK

Limited Jewels LLP Limitedi) Payments to &

provisions forDirectorsremuneration — — 25,000 25,000 — — — — — — — —

— — (40,000) (40,000) — — — — — — — —ii) Reimbursement

made towardsexpenses — — — — — — — — — — 198,856 —

— — — — — — — — — — — —iii) Issue of Equity

Shares 5,199,090 — 260 260 260 3,198,000 650,000 679,900 182,000 286,000 — —— — — — — — — — — — — —

iv) Purchase ofInvestments — — — — — — — — — — — 22,995

— (8,856) — — — — — — — — — —v) Investment in

Limited LiabilityPartnership Firm — — — — — — — — — — 9,500,000 —

— — — — — — — — — — — —vi) Loans given — 2,764,500 — — — — — — — — — —

— (3,821,250) — — — — — — — — — —vii) Interest on

Loan given — 508,335 — — — — — — — — — —— — — — — — — — — — — —

viii) Share of Lossfrom LLP — — — — — — — — — — 1,303,204 —

— — — — — — — — — — — —ix) Sale of goods 11,168,377 — — — — — — — — — 3,526,014 41,858,771

(118,909) — — — — — — — — — — —x) Rent received — — — — — — — — — — 2,00,000 —

— — — — — — — — — — — —xi) Purchase of goods — — — — — — — — — — — 38,873,985

— — — — — — — — — — — (58,549,728)

a) Outstanding Loan given as on 31st March — — — — — — — —b) Outstanding Payables as on 31st March — — — — — — — —

— — — — — — — (12,448,691)c) Outstanding Receivables as on 31st March 19,319 3,272,835 — — — — 3,491,171 39,454,282

(118,909) (3,821,250) — — — — — —8. Cash and bank balances :

Balances with non scheduled banks in Current Accounts and EEFC account :Closing Balance (Rs.) Maximum Balance (Rs.)

31.03.2010 31.03.2009 31.03.2010 31.03.2009

ABN Amro Bank N. V. Current Account — 7,731,120 — —Barclays Bank Plc Current Account 4,430 435,114 13,806,390 13,550,513Barclays Bank Plc (EEFC) Account — 3,254 3,178, 149 12,592,803The Bank of Nova Scotia Current Account 1,215,385 1,014,170 3,702,400 14,116,227

9. DETAILS OF DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES : 31.3.2010 31.3.2009(i) The principal amount and the interest due thereon (to be shown separately)

remaining unpaid to any supplier as at the end of each accounting year. 752,795 591,467(ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro, Small

and Medium Enterprises Development Act, 2006, along with the amounts of thepayment made to the supplier beyond the appointed day during each accounting year. — —

(iii) The amount of interest due and payable for the period of delay in making payment (whichhave been paid but beyond the appointed day during the year) but without adding theinterest specified under Micro, Small and Medium Enterprises Development Act, 2006. — —

(iv) The amount of interest accrued and remaining unpaid at the end of each accounting year. — —(v) The amount of further interest remaining of further interest remaining due and payable

even in the succeeding years, until such date when the interest dues as above are adeductible expenditure under, Section 23 of the Micro, Small and Medium EnterprisesDevelopment Act, 2006. — —

85


10. MANAGERIAL REMUNERATION :The Profit and Loss Account includes payments and provisions on account of the Managing Director and Whole-timeDirectors as under:

PARTICULARS MANAGING WHOLE-TIME OTHER TOTAL TOTALDIRECTOR DIRECTOR DIRECTORS 31.3.2010 31.3.2009

i) Salaries — — — — —ii) Commission — — — — —iii) Directors Sitting Fees — — 50,000 50,000 80,000

— — 50,000 50,000 80,000

11. EARNING PER SHARE : 31.3.2010 31.3.2009Profit/(Loss) after Tax (20,885,876) (23,083,844)Weighted Avg. no. of shares + potential shares outstanding 3,954,179 3,921,500Earning per share (Basic) (5.22) (5.89)Earning per share (Diluted) (5.28) (5.89)

12. EMPLOYEE BENEFIT :GRATUITY:The Company has provided Gratuity and liable to the employee for the benefit equivalent to 15 days / 26 days salarylast drawn for each completed year of service depending on the date of joining. The same is payable on terminationof service or retirement, whichever is earlier. The benefit vests after five years of continuous service.Assumptions Gratuity Funded Gratuity Funded

31.03.2010 (Rs.) 31.03.2009 (Rs.)Reconciliation of opening and closing balances of the presentvalue of the defined benefit obligation:Obligation at period beginning 406,116 2,728,000Current service cost 100,864 73,000Interest cost 29,582 130,000Actuarial (gain) / loss (46,443) (781,000)Benefits paid (72,692) —

Obligation at period end 2010 417,427 2,150,000

Change in Plan assetsPlan assets at period beginning, at fair value — (2,728,000)Expected return on plan assets 16,252 —Actuarial (gain) / loss 19,413 782,000Contribution 478,989 1,743,000Benefits paid (72,692) 73,000

Plan assets at period end 2010, at fair value 441,962 (130,000)

Reconciliation of present value of the obligation andthe fair value of plan assetsFair value of plan assets at the end of the period 441,962 (130,000)Present value of the defined benefit obligation at the end of the period (417,427) 2,150,000Assets / (Liability) recognised in the balance sheet 24,535 (2,280,000)Expenses for the yearCurrent service cost 100,864 73,000Interest cost on benefit obligation 29,582 130,000Expected return on plan assets 16,252 —Net actuarial (gain)/loss recognised in the year 48,337 (781,000)Actual return on plan assetsEstimated contribution to be made in next annual year

Assumptions Gratuity 31st March 2010Discount Rate 8%Employee Turnover 4%Mortality —The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority,promotion and other relevant factors, such as supply and demand in the employment marketAmounts Benefit Plan(i) Defined Benefit Plan: Gratuity includes gratuity cost of Rs. 411,640/- (2008: Rs.539,071/-).(ii) Contributions: Contribution to Provident Fund is Rs.1,186,996/- (2008: Rs. 1,601,777/-), ESIC and Labour

Welfare Fund includes Rs. 482,140/- (2008: Rs.640,225/-).

86


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87


14. DETAILS OF RAW MATERIAL CONSUMED:Quantity Value (In Rupees)

JEWELLERY :Gold Gms 78674.69 120,242,121

(106630.54) (132,564,934)

Gold Findings Gms 997.63 1659501(11941.17) (1,634,379)

Silver Gms 691.55 41,032(1713.70) (34,934)

Cut & Polished Diamonds Cts 22577.07 244,254,365(28198.22) (323,821,630)

Alloys Gms 92699.88 642,518(99470.66) (489,697)

Mounting Gms 311.46 564,825— —

Colour Stone Cts 210.79 115,013.50(158.09) (71,126)

15. VALUE OF IMPORTS ON C.I.F. BASIS : 2009-10 2008-09Rupees Rupees

1. Raw Material 245,150,197 222,141,795

2. Consumable Stores 1,630,464 995,341

3. Capital Goods — —

4. Other Expenditures 335,350 932,612

16. EARNINGS IN FOREIGN EXCHANGE: 2009-10 2008-09Rupees Rupees

F.O.B.Value of Exports 476,041,350 595,518,044

17. Value of imported raw materials consumed and the value of all indigenous raw materials similarly consumed and thepercentage of each to the total consumption.

Particulars Amount in Rupees Percentage2009-10 2008-09 2009-10 2008-09

1 Raw Materials

A) Imported 180,547,580 161,540,252 49.08% 35.22%

B) Indigenous 187,300,199 297,076,448 50.92% 64.78%

2 Consumable Stores & Spares

A) Imported 1,783,400 1,436,501 47.74% 47.25%

B) Indigenous 1,951,867 1,603,819 52.26% 52.75%

18. Information given in accordance with the requirements of AS 17 on "Segment Reporting".

The Company has identified Two Reportable Segments viz. Jewellery Manufacturing and Investment Activity.Segments have been identified and reported taking into account nature of products and services, the different risksand returns and the internal business reporting systems.

a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities ofthe segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segmenton reasonable basis have been disclosed as "Unallocable".

b) Segment Assets and Segment Liabilities represent assets and liabilities in respective segments. Tax relatedassets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have beendisclosed as "Unallocable".

88


(i) Primary Segment Information:Year to 31.03.2010


Segment Revenue 485,611,953 758,363 — 486,370,316Segment Results (629,060) 758,363 — 129,303Less: unallocated expenses net — — — —of unallocated (income) — — 1,364,136 1,364,136Interest expenses (Net) 19,733,223 — — 19,733,223Profit before tax — — — (20,968,056)Depreciation and Amortization 3,998,403 — — 3,998,403Non cash expenses other thanDepreciation and Amortization — — — —Segment Assets 610,441,896 3,272,835 3,736,622 617,451,352Segment Liabilities 366,259,759 — 203,777 366,463,536(excluding Shareholders' Funds)

Year to 31.03.2009


Segment Revenue 553,932,870 (9,745,144) 17,120 544,204,846

Segment Results 659,545 (10,024,202) 17,120 (9,347,537)Less: unallocated expenses net —of unallocated (income) — — 962,841 962,841Interest expenses (Net) 15,778,543 — — 15,778,543Profit before tax — — — (26,088,921)Depreciation and Amortization 4,354,367 — — 4,354,367Non cash expenses other thanDepreciation and Amortization — — — —Segment Assets 527,833,184 16,042,264 11,028,169 554,903,617Segment Liabilities 292,425,202 — 800,492 293,225,694(excluding Shareholders' Funds) — — — —

The Company has identified Geographic Segments as its Secondary SegmentSecondary segmental reporting is based on the geographical location of the customers. The geographical segmentshave been disclosed on revenues within India (Sales to Customers in India) and revenues outside India (Sales toCustomers outside India).

(ii) Secondary Segment Information :PARTICULARS 31.03.2010 31.03.2009

Rupees Rupees1. Segment Revenue :

Within India 15,381,831 117,730Exports Outside India 470,230,122 553,815,140Total Revenue 485,611,953 553,932,870

2. Segment Assets : As at 31.03.2010 As at 31.03.2009Within India 4,240,065 118,909Exports Outside India 606,201,831 527,714,275Total Assets 610,441,896 527,833,184

3. Segment Liabilities : As at 31.03.2010 As at 31.03.2009Within India — —Exports Outside India 366,259,759 292,425,202Total Assets 366,259,759 292,425,202

89


19. FINANCIAL INSTRUMENTS / FORWARD CONTRACTS :The Company has entered into following forward / derivative instruments:a) The Company is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flow

denominated in foreign currency. The company limits the effects of foreign exchange rate fluctuations by followingestablished risk management policies including use of derivatives. The Company enters into forward and optioncontracts, where the counterparty is a Bank. The Forward Contract or options are not used for trading orspeculative purpose.

b) Outstanding Forward Contract for hedging currency risk (Net) entered into by the company US$ 1.18 million(Previous years US$ 2.95 equivalent to rupees 5.63 Crores (Previous year Rs. 12.48 Crores).

c) In accordance with the principles of prudence and other applicable guidelines as per Accounting Standardsnotified by the Companies (Accounting Standards) Rules, 2006 read with Schedule VI of the Companies Act,1956 the Company has recognised Rs. 2.92 Crores (Previous year 3.57 Crores) and charged the amount toprofit and loss account in respect of derivative contracts as at 31st March, 2010.Unhedged Foreign Currency Exposure : 2009-2010 2008-2009Outstanding Receivables US$ in million 4.995 2.91Outstanding Payable for ForeignOutward Bill Discount Account with Bank US$ in million 0.69 1.39Outstanding Payable for Packing CreditLoan in Foreign Currency US$ in million 1.59 —Outstanding Creditors forgoods and Spares US$ in million 3.09 1.54Exchange Earner's ForeignCurrency a/c with Banks US$ in million 0.004 0.00

20. The Deferred Tax Liability comprise of the following 2009-2010 2008-2009Deferred Tax Liability related to Fixed Assets 47,369 180,537Deferred Tax Assets related to Carried Forward of Loss — 1123652Deferred Tax Assets related to Defined benefits,Voluntary Retirement Expenses & Leave Salary 1783546 85340

21. Remuneration to Auditors:Particulars 2009-2010 2008-2009As Auditors 49,635 35,296Taxation 7,030 3,309Tax Audit Fees 9,515 5,515Others 13,236 8,275Total Rs. 79,416 52,395

22. DISCLOSURE IN RESPECT OF LOANS AND ADVANCES IN THE NATURE OF LOANS :As at As at As at As at

31.03.2010 31.03.2010 31.03.2009 31.03.2009Outstanding Maximum Outstanding Maximum

Balance Balance Balance Balanceduring the Year during the Year

Loans and Advances in thenature of loans given to Associates.(i) Loans to Associates — — — —(ii) Loans to Subsidiary 3,272,835 3,272,835 3,821,250 3,821,250

23. Sales include Exchange Loss of Rs. 11,326,813/- (Previous Year Exchange Loss of Rs. 42,900,610/-)24. A Voluntary Retirement Scheme was announced in the last quarter of the previous year. Total payments made

pursuant to the scheme aggregates to Rs.9,356,581/-. In accordance with transactional provision contained inAccounting Standard 15, the Company has chosen to amortize such expenses in equal quarterly installments overa period ending on 31st March, 2010. A sum of Rs.7,325,265/- (Previous year Rs. 18,313,161/-) has been charged toprofit & loss account in the current year

25. Previous Year figures have been rearranged or re-grouped, wherever necessary.

As per our report of even dateFor Pulindra Patel & Co. For and on behalf of the BoardChartered Accountants

Pulindra Patel Milan R. Mehta Nirav M. MehtaProprietor Managing Director DirectorMembership No. 048991Place : Mumbai Place : MumbaiDate : 28th May, 2010 Date : 28th May, 2010

90


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE :1. REGISTRATION DETAILS


Registration No. 1 2 9 1 7 6 State Code 1 1


2. Capital raised during the year (Amount in Rs. Thousands)Public Issue Bonus Issue

N I L N I L

Rights Issue Preferential Issue

7 8 4 . 2 9 N I L

3. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)Total Liabilities Total Assets

4 4 6 9 9 5 . 3 6 4 4 6 9 9 5 . 3 6

SOURCES OF FUNDSPaid-up Capital Reserves & Surplus

3 9 9 9 9 . 2 9 2 1 0 9 8 8 . 5 3


1 9 6 0 0 7 . 5 4 N I L

APPLICATION OF FUNDSNet Fixed Assets Investments

7 7 5 8 3 . 7 4 9 4 7 2 . 0 7

Deferred Tax Assets Misc. Expenditure

1 7 3 6 . 1 8 N I L

Net Current Assets Accumulated losses

3 5 8 2 0 3 . 3 7 N I L

4. Performance of Company (Amount in Rs. Thousands)Turnover / Income Total Expenditure

4 8 5 2 0 3 . 6 2 5 0 6 1 7 4 . 9 8


( 2 0 9 7 1 . 3 6 ) ( 2 0 8 8 5 . 8 8 )


( 5 . 2 2 ) –


a) Item Code No. (ITC Code) : 7 1 1 3 . 1 9

Jewellery

b) Item Code: N I L

c) Item Code : N I L

For and on behalf of the Board

Milan R. Mehta Nirav M. MehtaManaging Director Director

Place : MumbaiDate : 19th May, 2010

91


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATINGTO SUBSIDIARY COMPANY

Name of the subsidiary company : OOO Tiara Jewels

The financial year of the subsidiary ending on : 31st March, 2010

a) Number of shares in the subsidiary company : 5100 EQUITY SHARESheld by Diagold Designs Limited of 1.00 Ruble each.

b) Extent of interest of Holding Company at the end of the financial 51.00%year of the Subsidiary Company.

The net aggregate of profits less losses of the subsidiary companyso far as it concerns membership of Diagold Designs Limited

1) Not dealt with in the account ofDiagold Designs Limited amounted to

a) for the subsidiary's financial year (Amount in Rupees) 186,225

b) for the previous financial year of the subsidiarysince it became subsidiary (Amount in Rupees) (46,712)

2) Dealt with in the account ofDiagold Designs Limited amounted to :

a) for the subsidiary's financial year (Amount in Rupees) Nil

b) for previous financial year of the subsidiary Nilsince it become subsidiary (Amount in Rupees)


Milan R. Mehta Nirav M. MehtaManaging Director Director


92

Goldiam Jewels Limited

DIRECTORS' REPORT

Dear Members,

Your Directors have pleasure in presenting this Sixth AnnualReport on the affairs of the Company together with theAnnual Accounts for the year ended on 31st March, 2010.

FINANCIAL RESULTS:

The Sales for the year amounted to Rs.115,100,864/- ofwhich export sales amounted to Rs. 67,121,833/- and LocalSales amounted to Rs.47,979,031/- as compared toRs.102,985,326/- for the previous year registering a growthof 11.76% in the market recovering from recession.The Company earned other income of Rs.30,633/- ascompared to Rs.21,722/- for the previous year.The Company incurred net loss of Rs.2,763,734/- afterproviding Rs.1,529,083/- towards Depreciation,Rs.1,164,250/- towards preliminary expenses, Rs.425,849/-towards Deferred Tax Liability, as compared to a net profitof Rs.1,310,604/- for the previous year. The Companyincurred the loss due to increase in cost of materials by12.53% and manufacturing and other expenses by 47.92%.

DEPOSITS:

The Company has not received any deposit from the publicduring the year ended 31st March, 2010. There are nounclaimed or unpaid deposits as on 31st March, 2010.

DIVIDEND:

In order to conserve the resources for working capitalrequirements, the Board has decided not to recommendany dividend looking at the fund requirement for thebusiness.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 217(2AA) of theCompanies Act, 1956 with respect to Directors’Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of annual accounts forthe financial year ended 31st March, 2010, theapplicable accounting standards had been followedalong with proper explanation relating to materialdepartures;

(ii) that the directors had selected such accounting policiesand applied them consistently and made judgmentsand estimates that were reasonable and prudent soas to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and ofthe profit or loss of the Company for the year underreview;

(iii) that the directors had taken proper and sufficient carefor the maintenance of adequate accounting recordsin accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of the Companyand for preventing fraud and other irregularities;

(iv) That the directors had prepared the accounts for thefinancial year ended 31st March, 2010 on a‘going concern’ basis.

AUDITORS:

M/s Vijay J. Shah & Associates, Chartered Accountants,hold office until the conclusion of the ensuing AnnualGeneral Meeting and being eligible have consented to theirre-appointment and have furnished their eligibility certificateas required under Section 224(1B) of the CompaniesAct, 1956. The Board recommends their re-appointment.

DIRECTORS:

Pursuant to the provisions of Section 256 of the CompaniesAct, 1956 and the Articles of Association of the Company,Mr. Rashesh M. Bhansali, Director of the Company, retiresby rotation at the forthcoming Annual General Meeting andbeing eligible offers himself for re-appointment.Your directors recommend his re-appointment.

(A) CONSERVATION OF ENERGY, (B) TECHNOLOGYABSORPTION, (C) FOREIGN EXCHANGE EARNINGSAND OUTGO:

As required under the Companies (Disclosure of Particularsin the Report of the Board of Directors) Rules, 1988 theinformation is furnished herein below:

A. CONSERVATION OF ENERGY:

As the Gems & Jewellery Industry is not covered bythe Schedule prescribed by the said Rules, disclosureof particulars on conservation of energy is notapplicable to the Company.

B. TECHNOLOGY ABSORPTION:

The particulars regarding absorption of technology areannexed in the prescribed Form B of the Companies(Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

(In Rupees)

2009-2010 2008-2009

Total ForeignExchange Received: 71,659,476 89,532,881

Total Foreign Exchange used

i) Raw Materials 4,835,904 6,036,205ii) Consumable Stores 452,838 204,017iii) Capital Goods — —

PARTICULARS OF EMPLOYEES:

None of the employees has received remuneration/ salaryexceeding the limit as stated in Section 217(2A) of theCompanies Act, 1956 read with the Companies (Particularsof Employees) Rules, 1975 as amended by the Companies(Amendment) Act, 1988.

93


ACKNOWLEDGEMENTS;

Your Directors take this opportunity to place on record theirappreciation and sincere gratitude to Government of India,Government of Maharashtra and the Bankers to theCompany for their valuable support, and look forward totheir continued co-operation in the years to come.

Your Directors acknowledge the support and co-operationreceived from the employees and all those who have helpedin the day-to-day management.



FORM B

Form for disclosure of particulars with respect to TechnologyAbsorption, Research and Development (R & D), as perCompanies (Disclosure of Particulars in the Report of Boardof Directors) Rules, 1988

Research & Development:

1. Specific areas in which R&D is carried out by theCompany

The Company is always looking at newer technologiesto manufacture diamond studded gold jewellery, fusionbetween lost wax casting + process+ stamping+ Jewellery.

2. Benefits derived as a result of the above R & D

This R & D has enabled the Company to achieve highervolumes of sales and will enable the Company toreduce the cost of manufacturing Jewellery andthereby increase the revenue and profitability.

3. Future Plans of Action

The Company intends to continue the research in itspursuit for bringing attractively priced, finer qualityproducts to the customers.

4. Expenditure on R & D

R&D is a continuous process and the expenditure isnot specifically earmarked for the same and is debitedto the general manufacturing expenses:

Capital, Recurring, NIL

Total R & D Expenditure as %to total turnover: N.A

Technology absorption, adaptation and innovation:

1. Efforts, in brief, made towards absorption,adaptation and innovation:

With the introduction of Invisible setting in diamondand studded jewellery and princess cut diamondgrooving machinery, the Company has enhanced itsexport potential and value addition.

2. Benefit derived as a result of the above efforts e.g.product improvement, cost reduction, productdevelopment, import substitution, etc.

The benefit is being reflected in the areas ofcompetitiveness and higher turnover.

3. In case of imported technology (imported duringthe last 5 years reckoned from the beginning ofthe financial year), following information may befurnished:

a) Technology imported ) The Company has) not imported any

b) Year of import ) technology since its) inception.

c) Has Technology been )fully absorbed and )

d) if it is not fully absorbed, )areas where this has )not taken place, reasons )therefore and future )plans of action. )

ANNEXURES FORMING PART OF THE DIRECTORS’’ REPORTANNEXURE – I

94


COMPLIANCE CERTIFICATEToThe MembersGOLDIAM JEWELS LIMITED

We have examined the registers, records, books and papersof GOLDIAM JEWELS LIMITED (the Company) asrequired to be maintained under the Companies Act, 1956(the Act) and the rules made there under and also theprovisions contained in the Memorandum and Articles ofAssociation of the Company for the financial year endedon 31st March, 2010. In our opinion and to the best of ourinformation and according to the examinations carried outby us and explanations furnished to us by the Company,its Officers and Agents, we certify that in respect of theaforesaid financial period:

1. The Company has kept and maintained all registersas stated in Annexure ‘A’ to this certificate, as per theprovisions and the rules made there under and allentries therein have been duly recorded.

2. The Company has duly filed the forms and returns asstated in Annexure ‘B’ to this certificate, with theRegistrar of Companies, Regional Director, CentralGovernment, Company Law Board or other authoritieswithin the time prescribed under the Act and the rulesmade there under.


4. The Board of Directors duly met 6 times on19th May, 2009; 22nd July, 2009; 12th October, 2009;21st November, 2009, 18th January, 2010 and20th March, 2010 in respect of which meetingsproper notices were given and the proceedings wereproperly recorded and signed including the circularresolutions passed in the Minutes Book maintainedfor the purpose.

5. The Company has not closed its Register of Members,and/or debenture holders during the financial year.

6. The Annual General Meeting for the financial yearended 31st March, 2009 was held on 29th July, 2009after giving due notice to the members of the Companyand the resolutions passed there at were duly recordedin the Minutes Book maintained for the purpose.

7. No extra-ordinary general meeting was held during thefinancial year.

8. The Company has not advanced any loans to itsdirectors and/or persons or firms or Companiesreferred in the section 295 of the Act

9. The Company has duly complied with the provisionsof section 297 of the Act in respect of contractsspecified in that section.


11. As there were no instances falling within the purview ofsection 314 of the Act, the Company has not obtained

any approvals from the Board of directors, members orthe Central Government as the case may be.

12. The company has not issued any duplicate sharecertificate during the financial year.

13. (i) There was no allotment/ transfer/transmission orany other purpose in accordance with theprovisions of the Act;

(ii) The Company has not deposited any amount inseparate bank account as no dividend includinginterim dividend was declared during the financialyear;

(iii) The Company has not posted warrants fordividends to any members of the Company as nodividend was declared during the financial year;

(iv) The Company has not transferred the amountsin unpaid dividend account, application moneydue for refund, matured deposits, matureddebentures and the interest accrued thereonwhich have remained unclaimed or unpaid for aperiod of seven years to Investor Education anProtection Fund as this being the Fifth Year ofIncorporation.

(v) The Company has duly complied with therequirements of section 217 of the Act

14. The Board of Directors of the Company is dulyconstituted. There was no appointment of additionaldirectors, alternate directors and directors to fill casualvacancy during the financial year.

15. The Company has not appointed any managingdirector/whole-time director/ manager during thefinancial year.


17. The Company was not required to obtain any approvalsof the Central Government, Company Law Board,Regional Director, Registrar or such other authoritiesas prescribed under the various provisions of the Act.

18. The directors have disclosed their interest in otherfirms/companies to the Board of Directors pursuant tothe provisions of the Act and the rules made thereunder.

19. The Company has not issued any shares, debenturesor other securities during the financial year.

20. The Company has not bought back any shares duringthe financial year.

21. There was no redemption of preference shares ordebentures during the financial year.

22. There was no transaction necessitating the Companyto keep in abeyance the rights to dividend, right sharesand bonus shares pending registration of transfer ofshares.

23. The Company has not invited/accepted any depositsincluding any unsecured loans falling with the purviewof Section 58A during the financial year.

95


24. The Company has not made any borrowings duringthe financial year ended 31st March, 2010.

25. The Company has not made any loans or advancesor given guarantees or provided Securities to otherbodies corporate and consequently no entries havebeen made in the register kept for the purpose.

26. The Company has not altered the provisions of theMemorandum with respect to situation of theCompany’s registered office from one state to anotherduring the year under scrutiny.


28. The Company has not altered the provisions of theMemorandum with respect to name of the Companyduring the year under scrutiny.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of theCompany during the year under scrutiny.

30. The Company has not altered its Articles of Associationafter during the financial year.

31. There was no prosecution initiated against or showcause notices received by the Company, during thefinancial year, for offences under the Act.

32. The Company has not received any money as securityfrom its employees during the financial year.

33. The Company has deposited both employees’ andemployer’s contribution to Provident Fund withprescribed authorities pursuant to Section 418 ofthe Act.

For R. N. SHAH & ASSOCIATESCOMPANY SECRETARIES

(RAJNIKANT N. SHAH)Place: Mumbai ProprietorDate: 24th May, 2010 C. P. No. 700

Annexure ARegisters as maintained by GOLDIAM JEWELS LIMITED:










10. Register of Companies and Firms in which Directors are interested u/s. 301(3).

11. Register of Charge u/s. 143.

Annexure B

Forms and Returns as filed by GOLDIAM JEWELS LIMITED with Registrar of Companies, Regional Director,Central Government or other authorities during the financial year ended 31st March, 2010: -

1. Form 20B together with Annual Return dated 29/07/2009 filed u/s. 159 on 10/08/2009.

2. Form 23AC and 23ACA together with Balance Sheet as on 31/03/2009 and Profit and Loss Account for the yearended on that date filed u/s. 220 on 10/08/2009.

3. Form 66 along with Compliance Certificate for the financial year ended 31/03/2009 filed u/s. 383A on 31.07.2009.

4. Form 18 dated 20/03/2010 filed u/s. 146 for shifting of Registered Address of the Company within the same state andRegistered by Registrar of Companies, Maharashtra on 22/03/2010.

96


AUDITORS’ ’’ ’’ ’ ’ REPORTSTO THE MEMBERS OF GOLDIAM JEWELS LIMITED

We have audited the attached Balance Sheet of GOLDIAMJEWELS LIMITED as at 31st March, 2010. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinionon these financial statements based on our audit.

We conducted our audit in accordance with auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accounting principlesused and significant estimates made by management, aswell as evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order,2003 issued by the Central Government of India in termsof sub-section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure a statement on thematters specified in the paragraph 4 and 5 of the said order.

Further to our comments in the Annexure referred to above,we report that:

a) We have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purpose of our audit.

b) In our opinion, proper books of accounts as requiredby law have been kept by the Company, so far as itappears from our examination of those books.

c) The Balance Sheet dealt with by this report is inagreement with the books of account.

d) In our opinion, and based on information andexplanation given to us, the Balance Sheet dealt withby this report comply with the mandatory accountingstandards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.

e) In our opinion, and based on information andexplanations given to us, none of the directors isdisqualified as on 31st March, 2010 from being appointedas director in terms of clause (g) of sub-section 1 ofSection 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts together with notes thereon, give theinformation required by the Companies Act, 1956 inthe manner so required and give a true and fair viewin conformity with the accounting principles generallyaccepted in India.

i) in the case of Balance Sheet, of the state of affairsof the Company as at 31st March, 2010.

For Vijay J Shah & AssociatesChartered Accountants

Vijay J ShahProprietor

Place : MumbaiDate : 24th May, 2010.

97


ANNEXURE TO AUDITORS’’ REPORT(Referred to in 3rd paragraph of our report of even date)

1. (a) Some of the Fixed Assets are purchased duringthe year. The company has maintained recordsof Fixed Assets.

(b) During the year one vehicle is disposed off,against that new vehicle has been purchased.

2. As explained to us, the management has conductedphysical verification of inventory at reasonableintervals.

3. According to the information and explanation given tous, the company has not granted/taken any loans,secured or unsecured to/from companies, firm or otherparties covered in the register maintained undersection 301 of the companies Act, 1956.

4. In our opinion and according to the information andexplanation given to us, there are adequate internalcontrol procedures commensurate with the size of thecompany and nature of business. During the courseof our audit, no major weakness has been notice inthe internal controls.

5. (a) In our opinion and according to the informationand explanation given to us, we are of the opinionthat the particulars of contracts or arrangementsreferred to in section 301 of the Act that need tobe entered in to the register maintained undersection 301 have been so entered.

(b) In our opinion and according to the informationand explanations given to us, in respect of certaintransactions made in pursuance of such contractsor arrangements exceeding value of Rupees FiveLakhs entered into during the financial year,because of the unique and specialised nature ofthe items involved and absence of anycomparable prices, we are unable to commentwhether the transaction were made at prevailingmarket price at the relevant time.

6. The Company has not accepted any deposit from thepublic.

7. Internal audit requirement is not applicable to thecompany.

8. We have been informed that the Central Governmenthas not prescribed maintenance of cost records undersection 209(1) (d) of the Companies Act, 1956.

9. According to the records of the Company, theCompany is regular in depositing undisputed statutorydues including Provident Fund, Investor Education andProtection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, CustomsDuty, Excise Duty, cess and other statutory duesapplicable to it with the appropriate authorities.According to the information and explanation given tous, no undisputed amounts payable in respect ofProvident Fund, Employee State Insurance, IncomeTax, Sales Tax, Wealth Tax, Service Tax, CustomDuty, Excise Duty, cess and other undisputed statutorydues were outstanding, at the year end for a period ofmore than six months from the date they becomepayable.

10. Being the fourth year of commercial production theCompany has accumulated losses of earlier year atthe end of the financial year. Due to unfavorablecondition in the overseas market during the year thecompany has suffered a loss. In our opinion andexplanation given to us the prospects of company arevery good and there are fair amount of chance to wipeout the losses in forthcoming years.

11. Based on our audit procedure and as per theinformation and explanation given by the management,we are of the opinion that the Company has notdefaulted in repayment of dues to banks.The Company does not have any borrowing fromfinancial institutions or by way of debentures.

12. According to the information and explanation given tous, the Company has not granted any loans andadvances on the basis of security by way of pledgesof shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi / mutualbenefit fund / society. Therefore, the provisions ofclause 4(xiii) of the Companies (Auditors Report)Order, 2003 (as amended) are not applicable to theCompany.

14. In respect of investments, in our opinion and accordingto the information and explanation given to us, properrecords have been maintained, timely entries havebeen made therein. Investments have been held bythe Company in its own name. The Company has notundertaken any dealing/trading in shares anddebentures.

15. According to the information and explanations givento us, the Company has not given any guarantee forloans taken by its subsidiaries and associates frombanks or financial institutions.


17. We have been informed by the management that thefunds raised on short-term basis have not been usedfor long-term investment and vice-versa.

18. The Company has not made any preferential allotmentof shares to parties or companies covered in theregister maintained under section 301 of theCompanies Act, 1956.


20. The Company has not raised any money through apublic issue during the year.

21. Based upon the audit procedures performed for thepurpose of reporting the true and fair view of thefinancial statements and as per the information andexplanation given by the management, we report thatno fraud on or by the Company has been noticed orreported during the course of our audit.

For Vijay J Shah & AssociatesChartered Accountants

Vijay J ShahProprietor

Place : MumbaiDate : 24th May, 2010.

98


BALANCE SHEET AS ON 31ST MARCH, 2010

Schedule As at As atNo. 31.03.2010 31.03.2009


1) SHAREHOLDERS FUNDS :a) SHARE CAPITAL 1 30,000,000 30,000,000b) RESERVES AND SURPLUS 2 32,320,000 32,320,000

62,320,000 62,320,0002) SECURED LOAN 3 268,861 —

TOTAL Rs. 62,588,861 62,320,000

II) APPLICATION OF FUNDS :1) FIXED ASSETS

GROSS BLOCK 4 33,335,474 33,020,863LESS: DEPRECIATION 6,052,036 4,604,042

NET BLOCK 27,283,438 28,416,821CAPITAL WORK IN PROGRESS — —

2) DEFERRED TAX ASSET 240,914 666,7633) CURRENT ASSETS, LOANS AND 5

ADVANCESa) INVENTORIES 22,222,010 10,956,018b) SUNDRY DEBTORS 40,972,192 69,226,935c) CASH AND BANK BALANCES 3,695,977 3,170,501d) LOANS AND ADVANCES 3,292,423 2,515,754

70,182,601 85,869,208

4) LESS: CURRENT LIABILITIESAND PROVISIONS 61) CURRENT LIABILITIES 43,802,746 59,721,9232) PROVISIONS 26,603 22,641

43,829,349 59,744,564

NET CURRENT ASSETS 26,353,253 26,124,644MISCELLANEOUS EXPENDITURE 1,164,250 2,328,500(To the extent not written off or adjusted)PROFIT & LOSS ACCOUNT 7,547,006 4,783,272

TOTAL Rs. 62,588,861 62,320,000


Schedules referred to above form an integral part of Balance SheetAs per our report of even date.

For Vijay J Shah & Associates For and on behalf of the BoardChartered Accountants

Vijay J Shah Rashesh M. Bhansali Ashish KarnavatProprietor Managing Director Director


99


Schedules referred to above form an integral part of Profit & Loss AccountAs per our report of even date.






31.03.2010 31.03.2009Rupees Rupees Rupees

I) INCOME :SALESA) EXPORTS 67,121,833 102,985,326B) LOCAL 47,979,031 —

115,100,864 102,985,326OTHER INCOME 7 30,633 21,722

TOTAL Rs. 115,131,497 103,007,048

II) EXPENDITURE :RAW MATERIALS CONSUMED 8 97,282,929 86,448,750MANUFACTURING AND OTHER EXPENSES 9 16,944,668 11,455,478INTEREST & FINANCE CHARGES 10 378,959 418,911DEPRECIATION 4 1,529,083 1,617,773PRELIMINARY EXPENSES WRITTEN OFF 1,164,250 1,164,250LOSS ON SALE OF ASSETS 169,494 —

TOTAL Rs. 117,469,382 101,105,162

III) PROFIT :PROFIT BEFORE TAXATION (2,337,885) 1,901,887SHORT/EXCESS PROVISION FORTAXATION WRITTEN OFF — —PROVISION FOR TAXATION — —PROVISION FOR FRINGE BENEFIT TAX — 38,549PROVISION FOR DEFERRED TAX 425,849 552,734

PROFIT AFTER TAXATION (2,763,734) 1,310,604BALANCE BROUGHT FORWARD (4,783,272) (6,093,876)

PROFIT AVAILABLE FOR APPROPRIATION (7,547,006) (4,783,272)

BALANCE CARRIED FORWARD TO BALANCE SHEET (7,547,006) (4,783,272)

TOTAL Rs. (7,547,006) (4,783,272)


100


CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 20102009-10 2008-09

Rupees Rupees RupeesA) CASH FLOW FROM OPERATING ACTIVITIES :

NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS (2,337,885) 1,901,887ADJUSTMENT FOR :Depreciation (Schedule 4) 1,529,083 1,617,773Interest 358,329 405,880Preoperative expenses — —Miscellaneous expenditure written off 1,164,250 1,164,250(Short)/Excess Provision for taxation written off — —

3,051,662 3,187,903OPERATING PROFIT BEFOREWORKING CAPITAL CHANGES 713,777 5,089,790ADJUSTMENT FOR :Trade and other Receivable 27,478,074 (16,044,354)Inventories (11,265,992) (291,363)Trade Payable (15,915,215) 11,614,331

296,868 (4,721,386)

CASH GENERATED FROM OPERATIONS 1,010,645 368,404Interest Paid (378,959) (418,911)Direct Tax Paid — (34,943)

(378,959) (453,854)

CASH FLOW BEFORE EXTRAORDINARY ITEMS 631,686 (85,450)

NET CASH FROM OPERATING ACTIVITIES 631,686 (85,450)B) CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (662,972) (164,257)Sale of Fixed Assets 267,272 —Purchase of Investments — —Sale of Investments — —Interest Received 20,630 13,031Dividend — —

NET CASH USED IN INVESTING ACTIVITIES (375,071) (151,226)C) CASH FLOW FROM FINANCING ACTIVITIES :

Repayment of Long Term Borrowing 268,861 —

NET CASH USED IN FINANCING ACTIVITIES 268,861 —

NET INCREASE IN CASH AND CASH EQUIVALENTS 525,476 (236,676)

CASH AND CASH EQUIVALENTS AS AT 01.04.2009 3,170,501 3,407,177

CASH AND CASH EQUIVALENTS AS AT 31.03.2010 3,695,977 3,170,501





101


As at As at31.03.2010 31.03.2009

Rupees Rupees RupeesSCHEDULE “1”SHARE CAPITAL :AUTHORISED CAPITAL3000000 Equity Shares of Rs. 10/- each 30,000,000 30,000,000

30,000,000 30,000,000Issued Capital3000000 Equity Shares of Rs.10/-each 30,000,000 30,000,000

30,000,000 30,000,000Subscribed and Paid up Capital3000000 Equity Shares of Rs.10/-each 30,000,000 30,000,000Out of which 15,16,500 Equity Shares are held by holdingcompany Goldiam International Limited

TOTAL Rs. 30,000,000 30,000,000SCHEDULE “2”RESERVES AND SURPLUS1. Security Premium

Opening Balance 32,320,000 32,320,000Add: Received during the year — —

32,320,000 32,320,000

TOTAL Rs. 32,320,000 32,320,000SCHEDULE “3”SECURED LOANCar Loan 268,861.00 —(Secured against the mortgage of Car)

268,861.00 —SCHEDULE “5”CURRENT ASSETS, LOANS AND ADVANCESI) CURRENT ASSETS :

a) INVENTORIES :As taken, valued & certified by the ManagementStock of Consumable Stores& Spare parts (at cost) 306,780 199,810Raw Materials (at cost or net realisable valuewhichever is less) 21,915,230 10,756,208

TOTAL Rs. 22,222,010 10,956,018

b) SUNDRY DEBTORS :(Unsecured)Outstanding for a period exceeding six months 14,848,921 8,758,668— Considered good less than six months 26,123,270 60,468,267— Considered doubtful — —Other Debts— Considered good — —— Considered doubtful — —

TOTAL Rs. 40,972,192 69,226,935c) CASH AND BANK BALANCES :

Cash on Hand 2,837,840 2,302,777Balance with Schedule Banks in— Current Account 100,025 58,920— EEFC Account 532,818 595,217— Fixed Deposit with Banks 225,294 213,588

TOTAL Rs. 3,695,977 3,170,501II) LOANS AND ADVANCES :

(Advances recoverable in cash or in kind orfor value to be received)Loans and Advances 2,949,783 2,159,499Security & Other Deposits 342,640 356,255

3,292,423 2,515,754

TOTAL Rs. 70,182,601 85,869,208

102


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103


As at As at31.03.2010 31.03.2009

Rupees Rupees RupeesSCHEDULE “6”CURRENT LIABILITIES & PROVISIONS :CURRENT LIABILITIES :Sundry Creditors :(Refer Note-15 of Schedule 10)Dues to Micro, Small and Medium Enterprises 953,939 876,192For Others 42,848,807 58,845,730

43,802,746 59,721,922PROVISIONS :Outstanding Labilities — —Professional Tax Payable 4,100 3,600Tax Deducted at Source 22,503 15,435Provision for Fringe Benefit Tax — 3,606

26,603 22,641

TOTAL Rs. 43,829,349 59,744,563


Rupees RupeesSCHEDULE “7”OTHER INCOME :Exchange Difference-others — —Miscellaneous Income /Discount 10,004 8,691Interest Received (TDS Rs.2104 /- Previous Year Rs. 2,684) 20,630 13,031

TOTAL Rs. 30,634 21,722

SCHEDULE “8”RAW MATERIALS CONSUMED :Opening Stock 10,756,208 10,418,712Add: Purchases 108,441,952 86,786,246(Net of Exchange gain Rs.6,355,861/- (Previous Year loss Rs.7,150,407/-))

119,198,160 97,204,958Less : Closing Stock 21,915,230 10,756,208

TOTAL Rs. 97,282,929 86,448,750

SCHEDULE “9”MANUFACTURING AND OTHER EXPENSES :MANUFACTURING EXPENSES :Stores & Spares 1,832,164 796,872Power & Water 1,192,749 1,085,560Repairs & Maintenance (Building) 9,360 2,450Machinery & Electrical Repairs 149,878 28,624Insurance (Building) 49,510 30,783Others 102,886 27,114

3,336,548 1,971,403

WAGES, SALARIES AND OTHER BENEFITS :Salaries, Wages, Bonus & Ex-gratia 4,302,022 3,501,883Contribution to E.S.I.C. 82,306 71,959Contribution to Provident Fund 88,123 97,430Gratuity to Staff 16,025 46,875Director Remuneration 444,000 —Workmen & Staff Welfare expenses 198,423 86,288

5,130,899 3,804,435OTHER EXPENSES :Insurance Charges 30,505 44,312Rent, Rates & Taxes 2,817,524 2,466,131Repairs & Maintenance 271,533 221,320Travelling and Conveyance 112,337 116,871Telephone Charges 157,096 180,505Printing & Stationery 41,419 25,311Auditors’ Remuneration 19,200 19,200Vehicle expenses 184,218 175,405Brokerage & Commission 332,400 —Debtors/Creditors written off 2,113,441 —General expenses 2,397,548 2,430,585

8,477,221 5,679,640

TOTAL Rs. 16,944,668 11,455,478

104


SCHEDULE “10”INTEREST & FINANCE CHARGESBank Charges 346,811 363,741Interest paid to Bank 643 662Foreign Bank Charges 31,505 54,508

TOTAL Rs. 378,959 418,911

For the For theyear ended year ended31.03.2009 31.03.2008

Rupees Rupees


1 SIGNIFICANT ACCOUNTING POLICIES:

A) BASIS OF PREPARATION OF ACCOUNTS :The financial statements have been prepared and presented under historical cost convention on the accrualbasis of accounting and comply with the Accounting Standards as specified in the Companies (AccountingStandard) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and therelevant provisions of the Companies Act, 1956, to the extent applicable. The financial statements have beenprepared under historical cost convention on an accrual basis except in case of assets for which provision forimpairment is made and revaluation is carried out in prior year.

B) USE OF ESTIMATES :The preparation of financial statements in conformity with generally accepted accounting principles (GAAP)requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent liabilities at the date of financial statements and reported amounts ofrevenue and expenses for the year. Although these estimates are based upon management ‘s best knowledgeof current events and actions, actual result could differ from these estimates.

C) FIXED ASSETS:Fixed Assets (including Plant & Machinery) are stated at cost (Net of VAT whereever applicable). They arestated at historical cost less accumulated depreciation and Impairment loss.

D) IMPAIRMENT OF ASSETS :i) The carrying amounts of assets are reviewed at each Balance Sheet date for indicators of impairment

based on internal / external factors. An Impairment loss is recognised wherever the carrying amount of anasset exceeds its recoverable amount.

ii) After Impairment, depreciation is provided on the revised carrying amount of the assets.iii) A previously recognised impairment is increased or reversed depending on changing in circumstances.

However, the carrying value after reversal is not increased beyond the carrying value that would haveprevailed by charging usual depreciation if there was not impairment.

E) DEPRECIATION:Depreciation on Fixed Assets is provided on “Straight Line Value” method and at the rates prescribed inSchedule XIV of the Companies Act, 1956. Depreciation on addition to fixed assets is provided on prorata basisfrom the date of acquisition or installation. Depreciation on assets sold, discarded, demolished or scrapped, isprovided upto the month in which the said assets is sold, discarded, demolished or scrapped.

F) INVENTORIES:i) Raw materials (including Work in Progress) are valued at cost or net realisable value, whichever is lower

on first in first out basis.ii) Stores and Spares are valued at cost on first in first out basis.

G) FOREIGN CURRENCY TRANSACTIONS:Transactions in foreign currency are recorded at the exchange rate prevailing at the date of the transaction.Exchange differences arising on foreign currency transactions settled during the year are recognised in theProfit and Loss Account. Monetary assets and liabilities denominated in foreign currencies, as at the balancesheet date, not covered by forward exchange contracts are translated at year end rates.

H) REVENUE RECOGNITION :Revenues/Incomes and Cost/Expenditures are generally accounted on accrual basis as they are earned orincurred.

I ) EMPLOYEE BENEFITS :(i) Defined Contribution Plan

Defined Contribution plans of the company comprise of Provident Fund and Pension plans.Employee benefits in the form of contribution to Provident Fund managed by Government authorities,Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contributionplan and the contributions are charged to the Profit and Loss Account of the year when the contributions tothe respective funds are due.

105


(ii) Defined Benefit PlanRetirement benefit in the form of Gratuity Benefit is considered as defined benefit obligation and is providedfor on the basis of actuarial valuationGratuity :The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligibleemployees. The plan provides for a lump sum payment to vested employees at retirement / death while inemployment or on termination of employment of an amount based on the respective employee’s salary andthe tenure of employment. Vesting occurs upon completion of given years of service. The company makesannual contributions to group gratuity fund established by Life Insurance Corporation of India.

J) RESEARCH AND DEVELOPMENT EXPENDITURE:Revenue expenses on Research & Development are charged to the Profit & Loss Account in the year in whichthese are incurred. Capital expenditure is taken as addition to the fixed assets.

K) SEGMENT INFORMATION :The Company has one business segment viz. Jewellery Manufacturing and is wholly engaged in export ofgoods manufactured and hence there are no separate geographical segments.

L) RELATED PARTY DISCLOSURESAs per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures oftransactions with related parties as defined in the Accounting Standard are given below:1) List of related parties and relationship where control exists or with whom transactions were entered into:Sr. No. Name of the Related Party Relationship1 Holding Company Goldiam International Limited2 Fellow subsidiaries Goldiam HK Limited (upto 22.07.2009)

Goldiam USA, Inc.3 Associates Goldiam HK Limited (from 23.07.2009)4 Key Management Personnel Mr. Manhar R. Bhansali (Chairman)

Mr. Rashesh M. Bhansali (Managing Director)Mr. Ashish Karnavat (Director)

2) Transaction during the year with related parties: (Amount in Rupees)Sr. Nature of Transaction Holding Company Subsidiary Company Key Management Joint VentureNo. of Holding Company Personnel

2009–10 2008–09 2009–10 2008–09 2009–10 2008–09 2009–10 2008–09

i) Sale of goods 50,639,600 7,598,509 7,335,934 7,335,934 1,132,677 0ii) Purchase of goods 0 0 411,448 0 1,254,977 294,659 3,921,285 0iii) Services 444,000 0iv) Outstanding Receivables

as on 31st March 14,216,187 7,598,509 3,894,882 3,894,882 0 0 563,806 0v) Outstanding Payables

as on 31st March 0 0 411,448 0 820,308 0 3,921,285 0

Sr. Nature of Holding Company Fellow SubsidiariesNo. Transaction Goldiam International Key Management Key Management

Limited Personnel PersonnelGoldiam USA, Inc. Goldiam HK Limited Diastud Inc. Ashish Karnavat

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

i) Sale of goods 50,639,600 7,598,509 7,335,934 188,998 0 0 1,132,677 0 0 570,309ii) Purchase of Goods 0 0 411,448 0 3,921,285 0 1,254,977 0 0 0iii) Services 0 0 0 0 0 0 0 0 444,000 0iv) Out. Receivables 14,216,187 7,598,509 3,894,882 188,998 563,806 0 1,682,213 743,850 0 0v) Out. Payables 0 0 411,448 0 3,921,285 0 750,216 0 70,092 0

M) EARNING PER SHARE :Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholdersby the weighted average number of equity shares outstanding during the year. For the purpose of calculatingdiluted earnings per share, the net profit or loss attributable to equity shareholders and the weighted averagenumber of shares outstanding during the year are adjusted for the effects of all diluted potential equity shares.

2009-10 2008-09Profit after Tax (2,763,734) 1,310,604Weighted Average no. of shares + potential shares outstanding 3000000 3000000Earning per share (Basic) -0.92 0.44Earning per share (Diluted) -0.92 0.44

106


N) PROVISION FOR CURRENT AND DEFERRED TAX :Tax expenses comprise of Current, Deferred Tax and fringe benefit taxes :Provision for Current tax is determined as the amount of tax payable in respect of taxable income for the period.Deferred income tax reflects the impact of current year timing differences between taxable income / losses andaccounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured onthe tax rates and tax laws enacted or substantively enacted as at the balance sheet date.

O) PROVISIONS / CONTINGENCIES :A Provision is created when an enterprise has a present obligation as a result of past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount and it is probable that anoutflow of resources will be required to settle the obligation. A disclosure for contingent liability is made whenthere is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resourcesis remote, no provision or disclosure is made.The Company does not recognise assets which are of contingent nature until there is virtual certainty of realizabilityof such assets. However, if it has become virtually certain that an inflow of economic benefits will arise, assetsand related income is recognised in the financial statements of the period in which the change occurs.

P) MISCELLANEOUS EXPENDITURE :Expenses included under the head “Miscellaneous Expenditure” are amortized over the period of five years.

2 CONTINGENT LIABILITIES NOT PROVIDED FORa) The Company has outstanding performance Guarantee of Rs. 35,00,000 as on the Balance Sheet date executed

in favour of Assistant Commissioner of Customs (Previous Year Rs.35,00,000)b) During the year, company has deposit in bank as Fixed Deposits as security against margin money for the bank

guarantee obtained from Bank on time to time basis. ForI) Rs.1,75,000/- against security for B-17 Bond for Rs.35,00,000 in favour of The Commissioner of Customs,

Mumbai for performance Guarantee.3 Estimated amount of Contracts remaining to be executed on Capital Account and not provided for is Rs.nil.

(Previous year Rs.nil.)


course of business.b) The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably

necessary

5 PARTICULARS IN RESPECT OF LICENSED CAPACITY, INSTALLED CAPACITY AND ACTUAL PRODUCTION

CLASS OF GOODS LICENSED CAPACITY INSTALLED CAPACITY ACTUALMANUFACTURED Unit PRODUCTION

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09


6 DETAILS OF DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES :31.3.2010 31.3.2009

(i) The principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of each accounting year. 953,939 876,192

(ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro, SmallMedium Enterprises Development Act, 2006, along with the amounts of and supplierbeyond the appointed the payment made to the day during each accounting year. NIL NIL

iii) The amount of interest due and payable for the period of delay in making payment(which have been paid but beyond the appointed day during the year) but without adding the interest specified under Micro, Small and Medium EnterprisesDevelopment Act, 2006. NIL NIL

iv) The amount of interest accrued and remaining unpaid at the end of eachaccounting year. NIL NIL

v) The amount of further interest remaining due and payable even in the succeeding year,until such date when the interest dues as above are actually paid to the small enterprisefor the purpose of disallowance as a deductible expenditure under section 23of the Micro, Small and Medium Enterprises Development Act, 2006. NIL NIL

7 RETIREMENT BENEFITS TO EMPLOYEES :Company’s contributions to Provident Fund is charged to Profit & loss Account. Contribution towards Gratuity basedon the premium contribution determined by the Life Insurance Corporation of India under the Group Gratuity(Cash Accumulation) Scheme, as applicable is charged to the Profit & Loss Account. Accrued liability towards leaveencashment is provided on the basis of actual leave due as at the Balance Sheet date.

107


GENERAL DESCRIPTION OF DEFINED BENEFIT PLAN:GRATUITY:The Company makes annual contribution to the Employees’ Group Gratuity-Cum-Life Assurance Scheme of the LifeInsurance Corporation of India, a funded benefit plan for qualifying employees. The scheme provides for lump sumpayment to vested employees at retirement, death while in employment or on termination of employment of anamount equivalent to 15 days service for each completed year of service or part thereof depending on the date ofjoining. The benefit vests after five years of continuous service.Assumptions Gratuity Funded

31.03.2010 (Rupees)Reconciliation of opening and closing balances of the presentvalue of the defined benefit Obligation:Present Value of obligation as at beginning of year 105,000Current service cost 44,271Interest cost 8,400Actuarial (gain) / loss (36,646)Benefits paid —Present Value of obligation as at end of the year 121,025Change in Plan assetsPlan assets at period beginning, at fair value —Expected return on plan assets —Actuarial (gain) / loss —Contribution —Benefits paid —Fair value of Plan assets at end of the year —Fair Value of Plan AssetsFair Value of plan assets at beginning of year —Actual return on plan assets —Contributions —Benefits paid —Fair Value of plan assets at the end of year —

Funded status —Excess of Actual over estimated return —The Amounts to be recognized in the balance sheet and statements of profit and lossPresent value of obligations as at the end of year 121,025Fair value of plan assets as at the end of the year —Funded status (121,025)Net asset/(liability) recognized in balance sheet (121,025)Expenses for the yearCurrent service cost 44,271Interest cost on benefit obligation 8,400Expected return on plan assets —Net actuarial (gain)/loss recognised in the year (36,646)Total Expenses Recognised in the Profit and Loss Account 16,025

Assumptions 31st March 2010 GratuityDiscount Rate 8%Employee Turnover 8%Salary Escalation 8%Mortality Indian Assured Lives Morality (1994-96)The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotionand other relevant factors, such as supply and demand in the employment market.(I) Amounts recognised as an expenses : 16,025/-

(i) Defined Benefit Plan:Gratuity includes gratuity cost of Rs. 44,271/- (Previous Year Rs. 46,875/-)Leave Encashment Rs. 114,457/- (Previous Year Rs. 111,033/-).

(ii) Defined Contribution Plan:Contribution to Provident Fund is Rs. 88,123/- (Previous Year Rs. 97,430/-).ESIC and Labour Welfare Fund includes Rs. 74,718/- (Previous Year Rs. 77,755/-).

108


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8 DETAILS OF RAW MATERIAL CONSUMED :JEWELLERY DIVISION : Quantity Value (In Rupees)Gold (Grams) 25,362.15 39,611,234

(22,340.27) (27,188,985)Rhodium (Grams) 6,000.00 64,591

(5000.00) (105,725)Gold Findings (Grams) 145.22 150,717

(18.36) (82,200)Cut & Polished Diamonds (Carats) 5,597.31 57,021,558

(4,072.43) (58,369,241)Colour Stones (Carats) 3,414.39 167,409

(219.39) (37,987)Alloy (Grams) 81,115.95 187,057

(51,105.30) (660,639)SILVER 6,307.44 80,363

(293.73) (3,973)

9 VALUE OF IMPORTS ON C.I.F. BASIS :PARTICULARS 2009-10 (Rs.) 2008-09 (Rs.)

1 Raw Materials 4,835,904 6,036,2052 Consumable Stores 452,838 204,0173 Capital Goods — —

10 EXPENDITURE IN FOREIGN CURRENCY :Foreign Travels — —Professional fees — —Other Expenses — —

11 EARNINGS IN FOREIGN EXCHANGE:F.O.B.Value of Exports 71,659,476 89,532,881

12 Value of imported raw materials consumed and the value of all indigenous raw materials similarly consumed and thepercentage of each to the total consumption.

Particulars Amount in Rupees Percentage(%)2009-10 2008-09 2009-10 2008-09

1 Raw MaterialsA Imported 40,232,457 39,599,466 41.36% 45.81%B Indigenous 57,050,474 46,849,284 58.64% 54.19%

2 Consumable Stores & SparesA Imported 42,483 504,506 2.32% 48.28%B Indigenous 1,789,681 540,442 97.68% 51.72%

13 The Deferred Tax Liability comprise of the following As at 31.03.2010 As at 31.03.2009Deferred Tax Liability related to Fixed Assets 425,849 552,734Deferred Tax Asset related to Unabsorbed 0 0Loss & Depreciation

14 Remuneration to Auditors:Particulars 2009-10 2008-09As Auditors 10,500 10,500Others 8,700 8,700

Total Rs. 19,200 19,200

15 There are no dues to Small Scale Industrial Undertakings.16 Sales include Exchange Loss of Rs.5,301,945/- (Previous Year Exchange Profit Rs.9,891,481)17 Previous Year figures have been rearranged or re-grouped, wherever necessary.

Signatures to the Schedules 1 to 10 forming part of the Balance Sheet and Profit and Loss Account.As per our report of even date.For Vijay J Shah & Associates For and on behalf of the BoardChartered AccountantsVijay J Shah Rashesh M. Bhansali Ashish KarnavatProprietor Managing Director Director


110


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE :1. REGISTRATION DETAILS


Registration No. 1 4 8 6 3 7 State Code 1 1


2. Capital raised during the year (Amount in Rs. Thousands)Public Issue Bonus Issue

N I L N I L

3. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)Total Liabilities Total Assets

6 2 5 8 9 6 2 5 8 9


3 0 0 0 0 3 2 3 2 0


2 6 9 N I L


N I L


2 7 2 8 4 N I L

Net Current Assets Misc. Expenditure

2 6 3 5 3 1 1 6 4

Deferred Assets Accumulated Losses

2 4 1 7 5 4 7

4. Performance of Company (Amount in Rs. Thousands)Turnover Total Expenditure

1 1 5 1 3 1 1 1 7 4 6 9


– 2 3 3 8 – 2 7 6 4


– 0 . 9 2 0 0


a) Item Code No.: 7 1 1 3 . 1 9 J E W E L L E R Y

Goldiam Jewellery Limited

DIRECTORS' REPORTDear Members,Your Directors have pleasure in presenting this Fifth AnnualReport on the affairs of the Company together with theAudited Statement of Accounts for the year ended on31st March, 2010.FINANCIAL RESULTS:

(Rupees in Lacs)Year ended Year ended31.03.2010 31.03.2009

Sales for the year 6075.42 4846.88Profit before Financialexpenses, Preliminaryexpenses, depreciationand taxation 769.45 1068.51Less: Financial expenses 164.67 120.09Operating profit beforePreliminary expenses,depreciation & taxation 604.78 948.42Less: Depreciation &

Preliminary expenseswritten off 31.46 27.58

Profit before taxation 573.32 920.84Provision for taxation (2. 30) (1.01)

Profit after taxation 575.62 921.85Add: Balance brought forward 1798.70 876.85

Profit available for appropriation 2374.32 1798.70

OPERATIONS:The improvement in the global economic scenario ascompared to that of the previous year has led to anincrease in the turnover of the Company fromRs.4846.88 lacs during the previous year to Rs.6075.42 lacsduring the year under report reflecting a growth of25.35% over the previous year. The Company has,however, earned a net profit of Rs.575.62 lacs after taxas compared to a net profit after tax of Rs.921.85 lacsfor the previous year registering a decline of 37.56%.The decline in the profit can be attributed to the increasein the cost of materials, manufacturing & other expensesand financial expenses.

DEPOSITS:The Company has not invited/ accepted any depositfrom the public during the year ended 31st March, 2010.There were no unclaimed or unpaid deposits as on31st March, 2010.

DIVIDEND:With a view to conserve the resources for meeting theworking capital requirements of the Company, the Boardof Directors of the Company has decided not torecommend any dividend for the year under report.

DIRECTORS:Pursuant to the provisions of Section 256 of theCompanies Act, 1956 and the Articles of Association ofthe Company, Mrs. Ami R. Bhansali and Mr. Kunal H. Vora,Directors of the Company, retire by rotation at theforthcoming Annual General Meeting and, being eligible,offer themselves for re-appointment. Your directorsrecommend their re-appointment.

DIRECTORS’ RESPONSIBILITY STATEMENT:Pursuant to the requirement under section 217(2AA) ofthe Companies Act, 1956 with respect to Directors’Responsibility Statement, it is hereby confirmed:(i) that in the preparation of the annual accounts for

the financial year ended 31st March, 2010, theapplicable accounting standards had beenfollowed along with proper explanation relating tomaterial departures;

(ii) that the directors had selected such accountingpolicies and applied them consistently and madejudgements and estimates that are reasonableand prudent so as to give a true and fair view ofthe state of affairs of the Company at the end ofthe financial year and of the profit or loss of theCompany for the year under review;

(iii) that the directors had taken proper and sufficientcare for the maintenance of adequate accountingrecords in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assetsof the Company and for preventing and detectingfraud and other irregularities;

(iv) that the directors had prepared the accounts forthe financial year ended 31st March, 2010 on a‘going concern’ basis.

AUDITORS:M/s Pulindra Patel & Co., Chartered Accountants, holdoffice until the conclusion of the ensuing Annual GeneralMeeting and being eligible have consented to theirre-appointment and have furnished their eligibility certificateas required under Section 224(1B) of the CompaniesAct, 1956. The Board recommends their re-appointment.

SECRETARIAL COMPLIANCE CERTIFICATE:Secretarial Compliance Certificate of M/s. R. N. Shah &Associates, Company Secretaries, as required underSection 383A of the Companies Act, 1956 is attachedherewith.

(A) CONSERVATION OF ENERGY, (B)TECHNOLOGY ABSORPTION, (C) FOREIGNEXCHANGE EARNINGS AND OUTGO:Particulars as prescribed under Section 217(1)(e) of theCompanies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 are as furnished herein below:

A. CONSERVATION OF ENERGY:As the Gems & Jewellery Industry is not covered bythe Schedule prescribed by the said Rules,disclosure of particulars on conservation of energyis not applicable to the Company.

B. TECHNOLOGY ABSORPTION:The particulars regarding absorption of technologyare annexed in the prescribed Form B of theCompanies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:The Company’s main l ine of business ismanufacturing and exporting studded gold jewellery.The Company has achieved Export Turnover ofRs.6075.42 lacs during the year under review,2009-2010, as compared to Rs.4846.88 lacs in theprevious year, 2008-2009.

111

112


ANNEXURE – IIINFORMATION REQUIRED AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITHCOMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2010Sr. Name Designation Remuneration Qualification Age Experience Date of Particulars of lastNo. (Rs.) (Years) Commencement Employment

of Employment1. Mr. Rashesh Managing 3,185,086 T.Y.B.Com. 42 23 01.01.2008 —

M. Bhansali Director2. Mrs. Ami R. Whole-time 3,185,086 B.Com. 42 22 01.02.2009 Whole-time Director in

Bhansali Director Diagold Designs LimitedNotes:1. Mr. Rashesh M. Bhansali, Managing Director, and his wife Mrs. Ami R. Bhansali, Whole-time Director, are related to

Mr. Manhar R. Bhansali, Chairman, as son and daughter-in-law respectively. Mrs. Ami R. Bhansali, Whole-time Director,is related to Mr. Kunal H. Vora, Director, as sister.

2. Gross Remuneration includes Salary, Ex-Gratia Payment, Taxable Value of Perquisites and Commission.3. The appointments of the Managing Director and Whole-time Directors are contractual.

2009-2010 2008-2009(In Rupees)

Total ForeignExchange Received: 621,891,419 464,880,498Total ForeignExchange usedi) Raw Materials 284,394,510 243,551,640ii) Consumable Stores 566,286 191,670iii) Capital Goods — —iv) Foreign Travels — —v) Others 91,534 133,849

PARTICULARS OF EMPLOYEES:Particulars of employees as required under theprovisions of Section 217(2A) of the CompaniesAct, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975 as amended by the CompaniesAmendment Act, 1988 are annexed hereto formingpart of this report.

ACKNOWLEDGEMENTS:Your Directors take this opportunity to place on recordtheir appreciation and sincere gratitude to Governmentof India, Government of Maharashtra, SEEPZ (SEZ)Authorities and the Bankers to the Company for theirvaluable support and look forward to their continued co-operation in the years to come.Your Directors acknowledge the support andco-operation received from the employees and all thosewho have helped in the day-to-day management.



ANNEXURES FORMING PART OF

THE DIRECTORS’'’’ REPORTANNEXURE – I

FORM BForm for disclosure of particulars with respect to TechnologyAbsorption, Research and Development (R & D) as perCompanies (Disclosure of Particulars in the Report of Boardof Directors) Rules, 1988Research & Development:1. Specific areas in which R & D is carried out by the

CompanyThe Company’s R & D is focused on offering highquality, competitively priced, innovative design jewelleryto its customers. It places emphasis on latesttechnologies for manufacturing diamond studded goldjewellery which can lead to improved quality. In additionto the invisible setting in diamond, the Company hasintroduced new micro pave hand set technology.

2. Benefits derived as a result of the above R & DThis R & D will enable the Company to offer high quality,innovative jewellery which is competitively priced to itscustomers and thereby increase customer satisfaction,revenue and profitability.

3. Future plan of actionThe Company intends to continue the research in itspursuit for bringing attractively priced, finer qualityproducts to the customers.

4. Expenditure on R & DR&D is a continuous process and the expenditureis not specifically earmarked for the same and isdebited to the general manufacturing expenses:

(a) Capital NIL(b) Recurring NIL(c) Total NIL(d) Total R & D expenditure as

a percentage of total turnover N.ATechnology absorption, adaptation and innovation:1. Efforts, in brief, made towards technology

absorption, adaptation and innovation:The Company endeavours to keep itself abreast withthe technical developments, innovations and trends inits line of business and constantly strives to incorporatethe same in manufacturing jewellery and improve thedesign & quality of its products and reduce the costs.

2. Benefits derived as a result of the above efforts,e.g. product improvement, cost reduction, productdevelopment, import substitution, etc.The benefits are being reflected in the areas ofcompetitiveness and higher turnover.

3. In case of imported technology (imported duringthe last 5 years reckoned from the beginning of thefinancial year), following information may befurnished:a) Technology imported ) The Company has notb) Year of import ) imported any technologyc) Has technology been ) since its inception

fully absorbed and )d) If not fully absorbed, )

areas where this has )not taken place, )reasons there for )and future )plans of action.

113


9. The Company has duly complied with theprovisions of section 297 of the Act in respect ofcontracts specified in that section.


11. As there were no instances falling within thepurview of section 314 of the Act, the Companyhas not obtained any approvals from the Board ofdirectors, members or the Central Government asthe case may be.

12. The company has not issued any duplicate sharecertificate during the financial year.

13. The Company has:

(i) There was no allotment/transfer/transmissionof securities during the financial year.

(ii) not deposited any amount in separate bankaccount as no dividend including interimdividend was declared during the financialyear;

(iii) not posted warrants for dividends to anymembers of the Company as no dividend wasdeclared during the financial year;

(iv) not transferred the amounts in unpaiddividend account, application money due forrefund, matured deposits, matureddebentures and the interest accrued thereonwhich have remained unclaimed or unpaid fora period of seven years to Investor Educationan Protection Fund as this being the FifthYear of Incorporation.

(v) duly complied with the requirements ofsection 217 of the Act.

14. The Board of Directors of the Company is dulyconstituted and the appointments of directors,additional directors, alternate directors anddirectors to fill casual vacancies have been dulymade.

15. The appointment of Managing Director andWhole-time Director has been made in compliancewith the provisions of section 269 read withSchedule XIII to the Act.


17. The Company was not required to obtain anyapprovals of the Central Government, CompanyLaw Board, Regional Director, Registrar or suchother authorities as prescribed under the variousprovisions of the Act.

18. The directors have disclosed their interest in otherfirms/companies to the Board of Directors pursuantto the provisions of the Act and the rules madethereunder.

19. The Company has not issued any shares/debentures/other securities during the financialyear.

COMPLIANCE CERTIFICATE

ToThe MembersGOLDIAM JEWELLERY LIMITED

We have examined the registers, records, books andpapers of GOLDIAM JEWELLERY LIMITED(the Company) as required to be maintained under theCompanies Act, 1956 (the Act) and the rules madethereunder and also the provisions contained in theMemorandum and Articles of Association of theCompany for the financial year ended on 31st March, 2010.In our opinion and to the best of our information andaccording to the examinations carried out by us andexplanations furnished to us by the Company, its Officersand agents, we certify that in respect of the aforesaidfinancial period:

1. The Company has kept and maintained all registersas stated in Annexure ‘A’ to this certificate, as perthe provisions and the rules made there under andall entries therein have been duly recorded.

2. The Company has duly filed the forms and returnsas stated in Annexure ‘B’ to this certificate, withthe Registrar of Companies, Regional Director,Central Government, Company Law Board or otherauthorities within the time prescribed under the Actand the rules made there under.


4. The Board of Directors duly met 6 (Six) times on8th April, 2009; 21st April, 2009; 28th April, 2009;31st July, 2009; 30th October, 2009 and29th January, 2010 in respect of which meetingsproper notices were given and the proceedingswere properly recorded and signed including thecircular resolutions passed in the Minutes Bookmaintained for the purpose.

5. The Company has not closed its Register ofMembers and/or debenture holders during thefinancial year.

6. The Annual General Meeting for the financialyear ended on 31st March, 2009 was held on30th June, 2009 after giving due notice to themembers of the Company and the resolutionspassed thereat were duly recorded in the MinutesBook maintained for the purpose.

7. One extra-ordinary general meeting was heldduring the financial year on 8th April, 2009 aftergiving due notice to the members of the Companyand the resolutions passed thereat were dulyrecorded in the minutes book maintained for thepurpose.

8. The Company has not advanced any loans to itsdirectors and/or persons or firms or Companiesreferred in the section 295 of the Act.

114


20. The Company has not bought back any sharesduring the financial year.

21. There was no redemption of preference shares ordebentures during the financial year.

22. There was no transaction necessitating theCompany to keep in abeyance the rights todividend, right shares and bonus shares pendingregistration of transfer of shares.

23. The Company has not invited/accepted anydeposits including any unsecured loans fallingwithin the purview of Section 58A during thefinancial year.

24. The amount borrowed by the Company fromdirectors, members, public, financial institutions,banks and others during the financial year ended31st March, 2010 are within the borrowing limits ofthe Company and that necessary resolutions asper section 293(1)(d) of the Act have been dulypassed at the General Body meeting of theMembers.

25. The Company has made loans and investment orgiven guarantees or provided securities to otherbodies corporate in compliance with the provisionsof the Act and has made necessary entries in theregister kept for the purpose.

26. The Company has not altered the provisions of theMemorandum with respect to situation of theCompany’s registered office from one state toanother during the period under scrutiny.


28. The Company has not altered the provisions of theMemorandum with respect to name of theCompany during the year under scrutiny andcomplied with the provisions of the Act.

29. The Company has not altered the provisions of theMemorandum with respect to share capital of theCompany during the year under scrutiny andcomplied with the provisions of the Act.

30. The Company has not altered its Articles ofAssociation during the financial year.

31. There was no prosecution initiated against or showcause notices received by the Company, duringthe financial year, for offences under the Act.

32. The Company has not received any money assecurity from its employees during the financial year.

33. The Company has deposited both employees’ andemployer’s contribution towards Provident Fundduring the financial year with prescribed authoritiespursuant to Section 418 of the Act.

For R. N. SHAH & ASSOCIATESCOMPANY SECRETARIES

PLACE : MUMBAI (RAJNIKANT N. SHAH)DATED : 19th May, 2010 Proprietor

C. P. No. 700

Annexure A

Registers as maintained by GOLDIAM JEWELLERYLIMITED:










10. Register of Companies and Firms in which Directorsare interested u/s. 301(3).

11. Register of Charge u/s. 143

Annexure B

Forms and Returns as filed by GOLDIAMJEWELLERY LIMITED with Registrar of Companies,Regional Director, Central Government or otherauthorities during the financial year ended31

st March, 2010:

1. Form 23 dated 08/04/2009 filed u/s. 372A on09/04/2009 for Inter Corporate Loans &Investments or Guarantee or Security in excessof the prescribed Limits.

2. Form 20B together with Annual Return dated30/06/2009 filed u/s. 159 on 10/08/2009.

3. Form 23AC & 23ACA together with Balance Sheetas on 31/03/2009 and Profit and Loss Account forthe year ended on that date filed u/s. 220 on16/07/2009.

4. Form 66 together with Compliance Certificate forthe financial year ended 31/03/2009 filed u/s. 383Aon 13/07/2009.

5. Form 32 dated 28/04/2009 filed u/s. 264(2)/266(1)(a) on 11/05/2009 for appointment ofMr. Rajesh G. Kapadia as an Additional Directorof the Company.

6. Form 32 dated 30/06/2009 filed u/s. 264(2)/266(1)(a) on 13/07/2009 for appointment ofMr. Rajesh G. Kapadia as a Director of theCompany in the Annual General Meeting.

7. Form 8 dated 30/06/2009 fi led u/s. 125 on10/07/2009 for creation of charge in favour ofHSBC Bank for Rs.150,000,000.00

115


AUDITORS'’ REPORT

TO THE MEMBERS OF GOLDIAM JEWELLERYLIMITED

We have audited the attached Balance Sheet ofGOLDIAM JEWELLERY LIMITED as at 31st March, 2010and also the Profit and Loss Account of the Companyfor the year ended on that date annexed thereto andCash Flow Statement for the year ended on that date.These financial statements are the responsibility of theCompany’s management. Our responsibility is toexpress an opinion on these financial statements basedon our audit.

We conducted our audit in accordance with auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material mis-statement. An auditincludes examining on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accountingprinciples used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our auditprovides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report)Order, 2003 issued by the Central Government of Indiain terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexurea statement on the matters specified in paragraphs4 and 5 of the said order.

Further to our comments in the Annexure referred toabove, we report that :

a) We have obtained al l the information andexplanations which to the best of our knowledge andbelief were necessary for the purpose of our audit.

b) In our opinion, proper books of accounts as requiredby law have been kept by the Company, so far as itappears from our examination of those books.

c) The Balance Sheet and Profit and Loss Account andCash Flow Statement dealt with by this report are inagreement with the books of account.

d) In our opinion, the Balance Sheet and Profit and LossAccount and Cash Flow Statement dealt with by thisreport comply with the mandatory accounting standardsreferred to in sub-section (3C) of Section 211 of theCompanies Act, 1956.

e) On the basis of the written representations receivedfrom the directors, as on 31st March, 2010 andtaken on record by the Board of Directors, we reportthat none of the directors is disqualified as on31st March, 2010 from being appointed as director interms of clause (g) of sub-section 1 of Section 274 ofthe Companies Act, 1956.

f) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts together with notes thereon, give theinformation required by the Companies Act, 1956 inthe manner so required and give a true and fair viewin conformity with the accounting principles generallyaccepted in India

i) in the case of Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2010;

ii) in the case of Profit and Loss Account, of theProfit of the Company for the year ended on thatdate; and

iii) in the case of Cash Flow Statement, of the cashflows of the Company for the year ended on thatdate.

For Pulindra Patel &Co.Chartered Accountants


Place : Mumbai Membership No. 48991Date : 19th May, 2010 FRN No. 115187W

Annexure(Referred to in 3

rd paragraph of our report of even date)

1. (a) The Company has maintained proper recordsshowing full particulars, including quantitativedetails and situation of fixed assets.

(b) All fixed assets have been physically verified bythe management in a phased periodical manner,which in our opinion, is reasonable having regardto the size of the Company and the nature of itsassets. According to the information andexplanations given to us, no material discrepancieswere noticed on such verification.

(c) There was no substantial disposal of fixed assetsduring the year and going concern status of the

company is not affected.2. a) As explained to us, the management has conducted

physical verification of inventory at reasonable intervals.b) In our opinion and according to the information &

explanations given to us, the procedure of physicalverification of inventories followed by themanagement are reasonable and adequate inrelation to the size of the Company and the natureof its business.

c) In our opinion and according to the information &explanations given to us, the Company hasmaintained proper records of inventory andno material discrepancies were noticed onphysical verification.

116


3. a) According to the information and explanations givento us, the Company has not granted any loans,secured or unsecured, to companies, firms or otherparties covered in the register maintained undersection 301 of the Companies Act, 1956.

b) According to the information and explanations givento us, the Company has taken unsecured loansfrom parties covered in the register maintainedunder section 301 of the Companies Act, 1956. Themaximum amount involved during the year wasRs.260,024,513/- and year end balance of the loanstaken was Rs.125,505,111/-.

c) In our opinion and according to the information andexplanations given to us, the rate of interest and otherterms and conditions for such loans are not primafacie prejudicial to the interest of the company.

d) In respect of loans received, repayment of theprincipal amount is as stipulated and payment ofinterest has been regular.

4. In our opinion and according to the information andexplanations given to us, there are adequate internalcontrol commensurate with the size of the Companyand the nature of its business, for the purchase ofinventory and fixed assets and for the sale of goodsand services. During the course of our audit, no majorweakness has been noticed in the internal controlsystem in respect of these areas.

5. (a) According to the information and explanations givento us, the transactions that need to be entered intothe register maintained under section 301 havebeen so entered.

(b) In our opinion and according to the information andexplanations given to us, these contracts orarrangements have been made at prices which arereasonable having regard to the prevailing marketprices at the relevant time.

6. The Company has not accepted any deposits from thepublic.

7. In our opinion, the company has an internal audit systemcommensurate with the size and nature of its business.

8. We have been informed that the Central Governmenthas not prescribed maintenance of cost records undersection 209(1)(d) of the Companies Act, 1956.

9. According to the information and explanations given tous and on the basis of the examination of the books ofaccount, the Company has been regular in depositingundisputed statutory dues including Provident Fund,Investor Education and Protection Fund, Employees’State Insurance, Income-tax, Sales-tax, Wealth tax,Service tax, Customs Duty, Excise Duty, cess and otherstatutory dues applicable to it with the appropriateauthorities. According to the information andexplanations given to us, no undisputed amountspayable in respect of Provident Fund, InvestorEducation and Protection Fund, Employees’ StateInsurance, Income tax, Sales tax, Wealth tax, Servicetax, Customs Duty, Excise Duty, cess and otherundisputed statutory dues were outstanding, at the year

end for a period of more than six months from the datethey became payable.

10. The Company has no accumulated losses at the endof the financial year and it has not incurred any cashlosses in the current and immediately precedingfinancial year.

11. Based on our audit procedure and as per the informationand explanations given by the management, we are ofthe opinion that the company has not defaulted in therepayment of the dues to the bank and financialinstitution. The company has no outstanding dues inrespect of debentures.

12. According to the information and explanations given tous, the Company has not granted any loans andadvances on the basis of security by way of pledge ofshares, debentures and other securities.

13. In our opinion and according to the information andexplanations given to us, the nature of activities of theCompany does not attract any special statue applicableto chit fund and nidhi / mutual benefit fund societies.

14. In our opinion and according to the information andexplanations given to us, the company is not dealing inshares, securities, debentures and other investments.Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor’s Report) Order, 2003 is notapplicable to the Company.

15. According to the information and explanations given tous, the Company had given guarantee for loans takenby its associates from bank and in our opinion the termsand conditions on which guarantee was given is notprima facie prejudicial to the interest of the company.


17. We have been informed by the management that thefunds raised on short-term basis have not been usedfor long-term investment.

18. The Company has not made any preferential allotmentof shares to parties or companies covered in the registermaintained under section 301 of the CompaniesAct, 1956.


20. The Company has not raised any money through apublic issue during the year.

21. Based upon the audit procedures performed for thepurpose of reporting the true and fair view of the financialstatements and as per the information and explanationsgiven by the management, we report that no fraud onor by the Company has been noticed or reported duringthe course of our audit.


(Pulindra Patel)Place : Mumbai ProprietorDate : 19th May, 2010 Membership No. 48991

117


Schedule As at As at No. 31.03.2010 31.03.2009


1) SHAREHOLDERS FUNDS :a) SHARE CAPITAL 1 10,000,000 10,000,000b) RESERVES AND SURPLUS 2 237,432,292 179,869,919

247,432,292 189,869,919 2) DEFERRED TAX LIABILITY — 48,199

(Refer Note No. 18 of Schedule 13) 3) LOAN FUNDS

SECURED LOANS 3 49,269,813 —UNSECURED LOANS 4 125,505,111 187,555,478

174,774,924 187,555,478

TOTAL Rs. 422,207,216 377,473,596II) APPLICATION OF FUNDS :

1) FIXED ASSETSGROSS BLOCK 5 24,179,645 22,851,148LESS: DEPRECIATION 9,583,994 6,483,896NET BLOCK 14,595,651 16,367,252

2) INVESTMENTS — —3) DEFERRED TAX ASSETS 188,142 —

(Refer Note No. 18 of Schedule 13)3) CURRENT ASSETS, LOANS AND 6

ADVANCESa) INVENTORIES 166,838,457 98,914,655b) SUNDRY DEBTORS 314,711,056 350,745,354c) CASH AND BANK BALANCES 46,392,483 20,370,512d) LOANS AND ADVANCES 7,438,340 3,668,361

535,380,336 473,698,882

4) LESS: CURRENT LIABILITIESAND PROVISIONS 71) CURRENT LIABILITIES 128,222,101 112,900,7872) PROVISIONS 12,820 16,094

128,234,921 112,916,881

NET CURRENT ASSETS 407,145,414 360,782,0015. MISCELLANEOUS EXPENDITURE 8

(To the extent not written off or adjusted)(Refer Note No. 1(O) of Schedule 13) 278,009 324,343

TOTAL Rs. 422,207,216 377,473,596 NOTES ON ACCOUNTS 13


Schedules referred to above form an integral part of Balance Sheet

This is the balance sheet referred to in our report of even date.


Pulindra M. Patel Manhar R. Bhansali Rashesh M. BhansaliProprietor Chairman Managing DirectorMembership No. 48991


118




31.03.2010 31.03.2009Rupees Rupees

I) INCOME :

SALES (Exports) 607,542,321 484,688,422

OTHER INCOME 9 287,422 253,291

TOTAL Rs. 607,829,743 484,941,713

II) EXPENDITURE :

COST OF MATERIALS 10 478,667,252 343,203,153

MANUFACTURING AND OTHER EXPENSES 11 52,217,729 34,887,607

FINANCIAL EXPENSES 12 16,466,790 12,008,660

PRELIMINARY EXPENSES WRITTEN OFF 46,334 46,334

DEPRECIATION / AMORTISATION 5 3,100,098 2,712,309

TOTAL Rs. 550,498,203 392,858,063

III) PROFIT :

PROFIT BEFORE TAX 57,331,540 92,083,649

PROVISION FOR TAX :

SHORT/EXCESS PROVISION FOR TAX 7,312 —

CURRENT TAX 12,820 —

DEFERRED TAX 236,341 62,152

FRINGE BENEFIT TAX — 23,520

PRIOR PERIOD EXPENSES — 62,400

NET PROFIT FOR THE YEAR AFTER TAX 57,562,373 92,184,681

BALANCE BROUGHT FORWARD FROM LAST YEAR 179,869,919 87,685,238


APPROPRIATIONBALANCE CARRIED FORWARD TO BALANCE SHEET 237,432,292 179,869,919

TOTAL Rs. 237,432,292 179,869,919

EARNING PER SHARE (Face Value Rs.10/-)BASIC 57.56 92.18DILUTED 57.56 92.18(See Note No 17 of Schedule 13)NOTES TO ACCOUNTS 13

Schedules referred to above form an integral part of Profit & Loss Account

This is the profit & loss account referred to in our report of even date.




119


CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2010

PARTICULARS 2009-10 2008-09Rupees Rupees Rupees

A) CASH FLOW FROM OPERATING ACTIVITIES:NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS 57,331,540 92,083,649ADJUSTMENT FOR:Depreciation (Schedule 5) 3,100,098 2,712,309Interest 16,466,790 12,008,660Preliminary expenses written off 46,334 46,334(Short)/Excess Provision for taxation written off 7,312 —

19,620,534 14,767,303

OPERATING PROFIT BEFOREWORKING CAPITAL CHANGES 76,952,074 106,850,953ADJUSTMENT FOR:Trade and other Receivable 32,264,319 2,714,061Inventories (67,923,802) (56,091,140)Trade Payable 15,324,991 (57,645,684)

(20,334,491) (111,022,763)

CASH GENERATED FROM OPERATIONS 56,617,582 (4,171,810)Interest Paid (16,466,790) (12,008,660)Direct Tax Paid (6,951) (10,560)

(16,473,741) (12,019,220)

CASH FLOW BEFORE EXTRAORDINARY ITEMS 40,143,842 (16,191,030)

NET CASH FROM OPERATING ACTIVITIES 40,143,842 (16,191,030)B) CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of Fixed Assets (1,328,497) (2,217,818)— —

NET CASH USED IN INVESTING ACTIVITIES (1,328,497) (2,217,818)C) CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from Issue of Share Capital includingshare premium amount — —Repayment of Long Term Borrowing (12,780,554) (17,975,417)Dividend Paid — —

NET CASH USED IN FINANCING ACTIVITIES (12,780,554) (17,975,417)

NET INCREASE IN CASH AND CASH EQUIVALENTS 26,034,791 (36,384,265)CASH AND CASH EQUIVALENTS AS AT 01.04.2009 20,370,512 56,692,379CASH AND CASH EQUIVALENTS AS AT 31.03.2010 46,392,483 20,370,512

This is the cash flow statement referred to in our report of even date.




120


As at As at31.03.2010 31.03.2009

Rupees RupeesSCHEDULE “1”SHARE CAPITAL :AUTHORISED CAPITAL1000000 Equity Shares of Rs. 10/- each(Previous Year 1000000 Equity Sharesof Rs. 10/- each) 10,000,000 10,000,000

10,000,000 10,000,000

ISSUED CAPITAL1000000 Equity Shares of Rs.10/- each 10,000,000 10,000,000(Previous Year 1000000 Equity Shares of Rs.10/- each)

10,000,000 10,000,000

SUBSCRIBED AND PAID UP CAPITAL1000000 Equity Shares of Rs.10/-each 10,000,000 10,000,000(Previous year 1000000 Equity Shares of Rs.10/- each)I) Out of which 1000000 (1000000) Equity Shares ofRs.10/- each are held by Holding companyGoldiam International Limited

TOTAL Rs. 10,000,000 10,000,000

SCHEDULE “2”RESERVES AND SURPLUS1. Profit & Loss Account 237,432,292 179,869,919

TOTAL Rs. 237,432,292 179,869,919

SCHEDULE “3”SECURED LOANS :The Hongkong and Shanghai Banking Corporation LimitedPost Shipment Credit in Foreign Currency 49,269,813 —(Secured by Hypothecation of Present & FutureInventories, Receivables and First and exclusive chargeover all moveable assets and Corporate Guarantee byHolding Company M/s. Goldiam International Limited)

49,269,813 —SCHEDULE “4”UNSECURED LOANS :Short-term loans & advances:

(a) From Banks — —(b) From Others

(i) From Holding companyGoldiam International Limited 30,000,000 —

(ii) From Director — —

30,000,000 —Other loans & advances :

(a) From Banks — —(b) From Others

(i) From Holding companyGoldiam International Limited 45,046,481 170,024,513

(ii) From Director 50,458,630 17,530,965

95,505,111 187,555,478

TOTAL Rs. 125,505,111 187,555,478

SCHEDULE

121


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122


As at As atSCHEDULE “6” 31.03.2010 31.03.2009

Rupees RupeesCURRENT ASSETS, LOANS AND ADVANCES1) CURRENT ASSETS :

a) INVENTORIES :As taken, valued & certified by the ManagementStock of consumable Stores & Spare parts (at cost) 149,397 194,535Raw Materials 166,689,060 98,720,120(At cost or net realisable value whichever is less)

TOTAL Rs. 166,838,457 98,914,655b) SUNDRY DEBTORS :

(Unsecured)Outstanding for a period exceeding six months— considered good 201,912,347 193,315,002— considered doubtful — —Other Debts— considered good 112,798,709 157,430,352— considered doubtful — —

TOTAL Rs. 314,711,056 350,745,354c) CASH AND BANK BALANCES :

Cash on Hand 21,335 9,300Balance with Schedule Banks in— Current Account 4,486,052 13,523,735— EEFC Account 41,885,096 6,837,477

TOTAL Rs. 46,392,483 20,370,512II) LOANS AND ADVANCES :

(Advances recoverable in cash or in kind orfor value to be received)Loans and Advances 7,076,640 3,376,661Security & Other Deposits 361,700 291,700

7,438,340 3,668,361

TOTAL Rs. 535,380,336 473,698,882

SCHEDULE “7”CURRENT LIABILITIES & PROVISIONS :CURRENT LIABILITIES :Sundry creditors :Dues to Micro, Small and Medium Enterprises 2,286,654 1,337,789(Refer Note 7 of Schedule 13)Others 125,935,447 109,651,782Advances from Customers — 1,911,216

128,222,101 112,900,787PROVISIONS :Provision for Wealth Tax 12,820 —Provision for Fringe Benefit Tax — 16,094

12,820 16,094

TOTAL Rs. 128,234,921 112,916,881

SCHEDULE “8”MISCELLANEOUS EXPENDITURE:(To the extent not written off or adjusted)Preliminary expenses 145,519 166,307Less: 10% written off 20,788 20,788

124,731 145,519Pre-operative expenses 178,824 204,370Less: 10% written off 25,546 25,546

153,278 178,824

TOTAL Rs. 278,009 324,343

SCHEDULE

123


SCHEDULEFor the For the

year ended year endedSCHEDULE “9” 31.03.2010 31.03.2009

Rupees RupeesOTHER INCOME :Commission Income (TDS Rs.6,137/- Previous Year Rs.25,346/-) 61,371 223,706Credit Balance written back 214,105 7,433Exchange Difference Others — 14,580Interest Received on Loan (TDS Rs.814/- Previous Year Rs. 1,716/-) 11,946 7,572

287,422 253,291SCHEDULE “10”RAW MATERIALS CONSUMED :Opening Stock 98,720,120 42,585,443Add: Purchases 546,636,192 399,337,830

(Net of Exchange gain of Rs.10,419,302/- 645,356,312 441,923,273Previous Year gain of Rs.16,958,861/-)Less : Closing Stock 166,689,060 98,720,120

TOTAL Rs. 478,667,252 343,203,153SCHEDULE “11”MANUFACTURING AND OTHER EXPENSES :MANUFACTURING EXPENSES :Stores & Spares 1,337,938 772,276Power & Water 2,850,884 2,047,745Repairs & Maintenance (Building) 1,400 6,951Machinery & Electrical Repairs 49,807 30,058Grooving charges 609,459 707,341Insurance 38,091 28,555Others 9,036,281 4,836,687

13,923,860 8,429,613WAGES, SALARIES AND OTHER BENEFITS :Salaries, Wages, Bonus & Ex-gratia 8,155,541 12,232,208Contribution to E.S.I.C. 32,227 25,873Contribution to Provident Fund 47,688 50,200Contribution to LIC Group Gratuity Scheme 2,460 85,713Workmen & Staff Welfare expenses 508,610 151,864

8,746,526 12,545,858OTHER EXPENSES :Clearing Charges 2,065,661 1,954,297Insurance 68,392 58,582Exchange Difference 13,399,963 —Rent Rates & Taxes 1,138,752 1,264,537Repairs & Maintenance 173,593 200,314Commission on sales 4,050,763 3,611,723Travelling and conveyance 710,207 102,209Telephone charges 96,814 52,939Printing & Stationery 108,010 93,909Vehicle expenses 5,850 3,200Auditors’ Remuneration 25,000 27,575Professional charges 6,509,868 6,461,577General expenses 1,194,471 81,274

29,547,344 13,912,136

TOTAL Rs. 52,217,729 34,887,607SCHEDULE “12”INTEREST & FINANCE CHARGESBank Charges 2,251,870 289,804Interest on unsecured loan 13,300,427 11,699,817Interest paid to Bank 914,493 19,039

TOTAL Rs. 16,466,790 12,008,660

124



1 SIGNIFICANT ACCOUNTING POLICIES:

A) BASIS OF PREPARATION OF ACCOUNTS :The financial statements have been prepared and presented under historical cost convention on the accrualbasis of accounting and comply with the Accounting Standards as specified in the Companies (AccountingStandard) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and therelevant provisions of the Companies Act, 1956, to the extent applicable. The Financial Statements have beenprepared under historical cost convention on an accrual basis except in case of assets for which provision forimpairment is made.

B) USE OF ESTIMATES:The preparation of financial statements in conformity with generally accepted accounting principles (GAAP)requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent liabilities at the date of financial statements and reported amounts ofrevenue and expenses for the year. Although these estimates are based upon management’s best knowledgeof current events and actions, actual result could differ from these estimates.

C) FIXED ASSETS:Fixed Assets (including Plant & Machinery) are stated at cost (Net of VAT wherever applicable). They are statedat historical cost less accumulated depreciation and Impairment loss.

D) IMPAIRMENT OF ASSETS :i) The carrying values of assets are reviewed at each Balance Sheet date for indicators of impairment based

on internal/external factors. An Impairment loss is recognized wherever the carrying amount of an assetexceeds its recoverable amount.

ii) After Impairment, depreciation is provided on the revised carrying amount of the assets.iii) A previously recognized impairment loss is increased or reversed depending on changes in circumstances.

However, the carrying value after reversal is not increased beyond the carrying value that would haveprevailed by charging usual depreciation if no impairment loss had been recognized.

E) DEPRECIATION:Depreciation on Fixed Assets is provided on “Written Down Value” method and at the rates prescribed inSchedule XIV of the Companies Act, 1956. Depreciation on addition to fixed assets is provided on prorata basisfrom the date of acquisition or installation. Depreciation on assets sold, discarded, demolished or scrapped, isprovided upto the month in which the said asset is sold, discarded, demolished or scrapped.

F) INVENTORIES:i) Raw materials (including Work-in-Progress) are valued at cost or net realisable value, whichever is lower,

on first in first out basis.ii) Stores and Spares are valued at cost on first in first out basis.

G) FOREIGN CURRENCY TRANSACTIONS:i) Transactions in foreign currency are recorded at the exchange rate prevailing at the date of the transaction.

Exchange differences arising on foreign currency transactions settled during the year are recognised in theProfit and Loss Account. Monetary assets and liabilities denominated in foreign currencies, as at the balancesheet date, not covered by forward exchange contracts are translated at year end rates.

ii) In respect of Monetary items which are covered by forward exchange contracts, the difference between theyear end rate and rate on the date of the contract is recognised as exchange difference and is recognisedover the life of the contract.

iii) Any profit or loss arising on cancellation or renewal of forward foreign exchange contracts is recognised asincome or expense for the year.

H) REVENUE RECOGNITION:Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company andthe revenue can be reasonably measured.Sale of Goods:

Revenue is recognised when the significant risks and rewards of ownership to the goods is passed to the buyer.

I) EMPLOYEE BENEFITS:

(i) Defined Contribution Plan:

Defined Contribution plans of the company comprise of Provident Fund and Pension plans.

Employee benefits in the form of contribution to Provident fund managed by Government authorities,Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contributionplan and the contributions are charged to the Profit and Loss Account of the year when the contributions tothe respective funds are due.

125


(ii) Defined Benefit Plan:

Retirement benefits in the form of Gratuity benefit is considered as defined benefit obligation and is providedfor on the basis of an actuarial valuation.

Gratuity:The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligibleemployees. The plan provides for a lump sum payment to vested employees at retirement/death while inemployment or on termination of employment of an amount based on the respective employee’s salary andthe tenure of employment. Vesting occurs upon completion of given years of service. The company makesannual contributions to group gratuity fund established by Life Insurance Corporation of India.

J) RESEARCH AND DEVELOPMENT EXPENDITURE:Revenue expenses on Research & Development are charged to the Profit & Loss Account in the year in whichthese are incurred. Capital expenditure is taken as addition to the fixed assets.

K) SEGMENT INFORMATION:The Company has one business segment viz. Jewellery Manufacturing and is wholly engaged in export ofgoods manufactured and hence there are no separate geographical segments.

L) EARNING PER SHARE:Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, the net profit or loss attributable to equity shareholders and theweighted average number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares.

M) PROVISION FOR CURRENT AND DEFERRED TAX:Tax expenses comprise of Current, Deferred tax and Fringe benefit taxes :Provision for Current tax and Fringe benefit tax is determined as the amount of tax payable in respect of taxableincome for the period.The Company is eligible for exemption u/s 10AA of the Income Tax Act, 1961 and therefore Current Tax Provisionhas been made accordingly.Deferred income tax reflects the impact of current year timing differences between taxable income / losses andaccounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured onthe tax rates and tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assetsare recognized only to the extent that there is reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realized. In respect of carry forward losses, deferredtax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income will beavailable against which such losses can be set-off.

N) PROVISIONS / CONTINGENCIES:A Provision is created when an enterprise has a present obligation as a result of past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount and it is probable that anoutflow of resources will be required to settle the obligation. A disclosure for contingent liability is made whenthere is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resourcesis remote, no provision or disclosure is made.

The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisabilityof such assets. However, if it has become virtual certain that an inflow of economic benefits will arise, assets andrelated income is recognised in the financial statements of the period in which the change occurs.

O) MISCELLANEOUS EXPENDITURE:Expenses included under the head “Miscellaneous Expenditure” are amortized over the period of ten years.

2 RELATED PARTY DISCLOSURES:As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactionswith related parties as defined in the Accounting Standard are given below:

a) List of related parties and relationship

Holding Company Goldiam International Limited

Fellow subsidiaries Goldiam HK Limited (upto 22.07.2009)Goldiam USA, Inc.

Associates Goldiam HK Limited (from 23.07.2009)

Key Management Personnel Mr. Rashesh M. Bhansali (Managing Director)Mrs. Ami R. Bhansali (Director)

126


b) Transaction during the year with related parties: (Amount in Rupees)

Sr. Nature of Transaction Holding Company Key Management Relative of Key Enterprises over whichNo. Personnel Management Key Management

Personnel Personnel havedirect control

2009–10 2008–09 2009–10 2008–09 2009–10 2008–09 2009–10 2008–09i) Payments to & provisions for

Directors remuneration — — 6,370,172 10,231,516 — — — —ii) Loans taken 39,890,911 4,750,000 72,500,000 17,500,000 — — — —iii) Guarantee taken 150,000,000 —iv) Loans refunded 139,915,424 50,600,000 40,030,965 — — — — —v) Interest paid 6,323,975 10,343,618 6,976,437 30,965 — — — —vi) Sale of goods — — — — — — 126,658,545 23,978,034vii) Purchase of goods 66,325,061 50,982,828 — — — — 11,476,225 2,642,209

I) Outstanding Loan givenas on 31st March — — — — — — — —

II) Outstanding Loan receivedas on 31st March 75,046,481 170,024,513 50,458,630 17,530,965 — — — —

III) Outstanding Receivablesas on 31st March — — — — — — 107,754,931 23,978,034

IV) Outstanding Payablesas on 31st March 3,215,205 28,776,355 — 5,832,385 — — 108,953 —

V) Outstanding Guarantee takenas on 31st March 150,000,000 — — — — — — —

c) Disclosure in respect of Transaction with related parties during the year (Amount in Rupees)

Sr. Nature of Transaction Holding Subsidiary/Joint Subsidiary Key Management PersonnelNo. Company Venture of of Holding

Holding Company Company

Goldiam Goldiam Goldiam Rashesh AmiInternational HK USA, Bhansali Bhansali

Limited Limited Inc.i) Payments to & provision for

Directors remuneration — — — 3,185,086 3,185,086— — — (5,115,758) (5,115,758)

ii) Loans taken 39,890,911 — — 72,500,000 —(4,750,000) — — (17,500,000) —

iii) Loans refunded 139,915,424 — — 40,030,965 —(50,600,000) — — — —

iv) Guarantee taken 150,000,000 — — — —— — — — —

v) Interest paid 6,323,975 — — 6,976,437 —(10,343,618) — — (30,965) —

vi) Purchase of goods 66,325,061 6,835,836 4,640,389 — —(50,982,828) (2,642,209) — — —

vii) Sale of goods — — 126,658,545 — —— — (23,978,034) — —

I) Outstanding Loan received 75,046,481 — — 50,458,630 —as on 31st March (170,024,513) — — (17,530,965) —

II) Outstanding Receivables — — 107,754,931 — —as on 31st March — — (23,978,034) — —

III) Outstanding Payables 3,215,205 — 108,953 — —as on 31st March (28,776,355) — — (1,316,627) (4,515,758)

IV) Outstanding Guarantee taken 150,000,000 — — — —as on 31st March — — — — —

3 CONTINGENT LIABILITIES NOT PROVIDED FOR:The Company has outstanding performance guarantee of Rs.43,338,820/- as on the Balance Sheet date, executedin favour of Assistant Commissioner of Customs (Previous Year Rs.43,338,820/-)

4 Estimated amount of Contracts remaining to be executed on Capital Account and not provided for is Rs.nil.(Previous year Rs.nil.)

127



course of business.b) The provision for depreciation and for all known liabilities are adequate and not in excess of the amount reasonably

necessary.

6 PARTICULARS IN RESPECT OF LICENSED CAPACITY, INSTALLED CAPACITY AND ACTUAL PRODUCTION:

CLASS OF GOODS LICENSED CAPACITY INSTALLED CAPACITY ACTUAL PRODUCTIONMANUFACTURED Unit 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09


7 DETAILS OF DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES :31.03.2010 31.03.2009

Rupees Rupees(i) The principal amount and the interest due thereon (to be shown separately)

remaining unpaid to any supplier as at the end of each accounting year. 2,286,654 1,337,789(ii) The amount of interest paid by the buyer in terms of Section 16 of the Micro,

Small and Medium Enterprises Development Act, 2006, along with the amounts of the payment made to the supplier beyond the appointedday during each accounting year. NIL NIL

iii) The amount of interest due and payable for the period of delay in making payment(which have been paid but beyond the appointed day during the year) butwithout adding the interest specified under Micro, Small and MediumEnterprises Development Act, 2006. NIL NIL

iv) The amount of interest accrued and remaining unpaid at the end of eachaccounting year. NIL NIL

v) The amount of further interest remaining due and payable even in the succeedingyear, until such date when the interest dues as above are actually paid to thesection 23 of the Micro, Small and Medium Enterprises Development Act, 2006. NIL NIL

8 GENERAL DESCRIPTION OF DEFINED BENEFIT PLAN:GRATUITY:The Company makes annual contribution to the Employees’ Group Gratuity-Cum-Life Assurance Scheme of the LifeInsurance Corporation of India, a funded benefit plan for qualifying employees. The scheme provides for lump sumpayment to vested employees at retirement/death while in employment or on termination of employment of an amountequivalent to 15 days service for each completed year of service or part thereof depending on the date of joining. Thebenefit vests after five years of continuous service.Assumptions Gratuity Funded Gratuity Funded

31.03.2010 31.03.2009Rupees Rupees

Reconciliation of opening and closing balances of the presentvalue of the defined benefit Obligation:Present Value of obligation as at beginning of year 38,868 —Current service cost 32,409 —Interest cost 3,109 —Actuarial (gain) / loss (24,480) —Benefits paid — —

Present Value of obligation as at end of the year 49,906 38,868

Change in Plan assetsPlan assets at period beginning , at fair value 81,811 —Expected return on plan assets 7,363 —Actuarial (gain) / loss — —Contribution — 81,811Benefits paid — —

Fair value of Plan assets at end of the year 89,174 81,811

Fair Value of Plan AssetsFair Value of plan assets at beginning of year 81,811Actual return on plan assets 7,363Contributions —Benefits paid —Fair Value of plan assets at the end of year 89,174Funded status 39,268

Excess of Actual over estimated return 217,616 —

128


Assumptions Gratuity Funded Gratuity Funded31.03.2010 31.03.2009

Rupees RupeesThe Amounts to be recognized in the balance sheetand statements of profit and lossPresent value of obligations as at the end of year 49,906Fair value of plan assets as at the end of the year 89,174 81,811Funded status 39,268 38,868

Net asset/(liability) recognized in balance sheet (39,268) 42,943Expenses for the yearCurrent service cost 32,409 —Interest cost on benefit obligation 3,109 —Expected return on plan assets (7,363) —Net actuarial (gain)/loss recognised in the year (24,480) —

Total Expenses recognised in the Profit and Loss Account 2,460 85,713

Assumptions 31st March, 2010 31st March, 2009Gratuity Gratuity

Discount Rate 8% 8%Employee Turnover 4% 4%Salary Escalation 4% 3%Mortality 1994-96 LIC Mortality Table (Std.)

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion,and other relevant factors, such as supply and demand in the employment market.(I) Amounts recognised as an expense:

(i) Defined Benefit Plan:Gratuity includes gratuity cost of Rs. 2,460/- (Previous Year Rs. 85,713/-).Leave Encashment Rs. 34,665/- (Previous Year Rs. 53,985/-).

(ii) Defined Contribution Plan:Contribution to Provident Fund is Rs.47,688/- (Previous Year Rs. 50,200/-), ESIC and Labour WelfareFund includes Rs. 32,227/- (Previous Year Rs. 25,873/-).

9 FINANCIAL INSTRUMENTS / FORWARD CONTRACTS:The company has entered into following forward / derivative instruments :The Company is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flow denominatedin foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established riskmanagement policies including the use of derivatives. The Company enters into forward and option contracts, where thecounterparty is a Bank. The forward contracts or options are not used for trading or speculation purposes.Outstanding Forward Contract for hedging currency risk against Export Receivables entered into by the Company ason 31st March, 2010 is US$ 1.9 Million (Previous Year US$ 2 Million), equivalent to Rs.90,502,250/- (Previous Year Rs.82,530,000/-).Unhedged foreign currency exposure :

31.03.2010 31.03.2009Outstanding Receivables USD 5,006,501.99 5,266,024.78Outstanding creditors for goods and spares USD 2,739,424.98 1,851,001.51Outstanding creditors for goods and spares EURO 3,042.57 —Exchange Earner’s Foreign Currency a/c with HSBC Bank USD 794,290.41 123,272.77Exchange Earner’s Foreign Currency a/c with PNB Bank USD 27,266.89 10,926.97

10 MANAGERIAL REMUNERATION:a) Computation of Managerial Remuneration in accordance with Section 349 read with Section 198 of the Companies

Act, 1956Particulars Amount (in Rs.) Amount (in Rs.)Profit as per Profit & Loss Account 57,562,373Add: Directors’ Remuneration (including perquisites) 6,370,172

Provision for Wealth Tax 12,820

6,382,992

63,945,365Less: Short/Excess provision for taxation of earlier year written back

Excess provision written back 7,312Provision for Deferred Tax 236,341

243,653

Profit on which commission is payable 63,701,712

129


i) Managing Directors’ Commission:

1) Eligible Remuneration in terms of Section 309 of theCompanies Act, 1956 @5% of Rs. 63,701,712 3,185,086

Less: Remuneration (excluding commission) paid 3,185,086

Balance Commission Payable (0)

ii) Whole-time Directors’ Commission:

1) Eligible Remuneration in terms of Section 309 of the

Companies Act, 1956 @5% of Rs. 63,701,712 3,185,086

Less: Remuneration (excluding commission) paid 3,185,086

Balance Commission Payable (0)

b) Details of payment made to the Managing Directors and Directors : (Amount in Rupees)

PARTICULARS MANAGING WHOLE-TIME OTHER TOTAL TOTALDIRECTORS DIRECTOR DIRECTORS 2009-10 2008-09

i) Salaries 2,881,099 3,185,086 — 6,066,185 4,200,000

ii) Perquisites 303,987 — — 303,987 199,131

iii) Bonus — — — — —

iv) Commission — — — — 5,832,385

v) Sitting Fees — — 25000 25,000 —

TOTAL RS. 3,185,086 3,185,086 25,000 6,395,172 10,231,516

11. PARTICULARS IN RESPECT OF OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK :

DETAILS OF RAW MATERIAL CONSUMED:Quantity Value

in RupeesJEWELLERY DIVISION:

Gold (Grams) 128,772.55 200,137,168(95,068.22) (110,764,902)

Gold Findings (Grams) 2,438.80 5,045,616(1,107.15) (1,747,538)

Platinum 10.52 14,549— —

Silver 259.82 5,832(17.07) (334)

Cut & Polished Diamonds (Carats) 31,018.59 272,460,331(26,881.44) (229,982,960)

Gold Mountings — —— —

Color Stone 9.24 3,248(3.13) (20,519)

Silver Findings 1.25 1,287— —

Semi Finished Jewellery 16.91 74,187— —

Alloy (Grams) 145,600.10 925,034(108,296.00) (727,588)

Amountin Rupees

130


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12 VALUE OF IMPORTS ON C.I.F. BASIS:

PARTICULARS 2009-10 2008-09Rupees Rupees

1 Raw Materials 284,394,510 243,551,6402 Consumable Stores 566,286 191,6703 Capital Goods — —

13 EXPENDITURE IN FOREIGN CURRENCY: 2009-10 2008-09Rupees Rupees

Foreign Travels — —Others 91,534 133,849

14 EARNINGS IN FOREIGN EXCHANGE: 2009-10 2008-09Rupees Rupees

F.O.B.Value of Exports 621,891,419 464,880,49815 Value of imported raw materials consumed and the value of all indigenous raw materials similarly consumed and the

percentage of each to the total consumption.Particulars Amount in Rupees Percentage

2009-10 2008-09 2009-10 2008-091 Raw Materials

A Imported 281,557,567 196,586,745 58.82% 57.28%B Indigenous 197,109,685 146,616,408 41.18% 42.72%

2 Consumable Stores & SparesA Imported 578,950 212,665 43.27% 27.54%B Indigenous 758,988 559,611 56.73% 72.46%

16 EMPLOYEE BENEFIT:The Company has provided Gratuity and is liable to the employee for the benefit equivalent to 15 days / 26 dayssalary last drawn for each completed year of service depending on the date of joining. The same is payable ontermination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service.

17 EARNING PER SHARE:2009-10 2008-09

Profit after Tax 57,562,373 92,184,681Weighted Average no. of shares + potential shares outstanding 1000000 1000000Earning per share (Basic) 57.56 92.18Earning per share (Diluted) 57.56 92.18

18 The Deferred Tax Liability comprise of the following :As at As at

31.03.2010 31.03.2009Rupees Rupees

Deferred Tax Liability relating to Fixed Assets — 48,199Deferred Tax Asset relating to Fixed Assets 173,246 —Deferred Tax Asset relating to Leave Salary 14,896 —

19 Remuneration to Auditors:Particulars 2009-10 2008-09

Rupees Rupees

As Auditors 20,000 22,060Tax Audit Fees 5,000 5,515

Total Rs. 25,000 27,575

20 There are no dues to Small Scale Industrial Undertakings.21 Sales include Exchange Loss of Rs.16,218,045/- (Previous Year Exchange Gain of Rs. 22,926,592/-).22 Previous Year figures have been rearranged or re-grouped, wherever necessary.

Signatures to the Schedules 1 to 13 forming part of the Balance Sheet and Profit and Loss Account.As per our report of even date.For Pulindra Patel & Co. For and on behalf of the BoardChartered AccountantsPulindra M. Patel Manhar R. Bhansali Rashesh M. BhansaliProprietor Chairman Managing DirectorMembership No. 48991Place : Mumbai Place : MumbaiDate : 19th May, 2010 Date : 19th May, 2010

132


BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE


Registration No. U 3 6 9 1 0 M H 2 0 0 5 P L C 1 5 2 3 8 3

State Code 1 1


2. Capital raised during the year (Amount in Rs. Thousands)


N I L N I L

3. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)


4 2 2 2 0 7 4 2 2 2 0 7

SOURCES OF FUNDS


1 0 0 0 0 2 3 7 4 3 2


4 9 2 7 0 1 2 5 5 0 5


N I L



1 4 5 9 6 N I L


4 0 7 1 4 5 2 7 8

Deferred assets Accumulated losses

1 8 8 N I L

4. Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

6 0 7 5 4 2 5 5 0 2 1 1


5 7 3 3 1 5 7 5 6 2


5 7 . 5 6 0 0



INDEPENDENT ACCOUNTANTS' REVIEW

REPORTTo the Board of Directors and Stockholder of

Goldiam USA, Inc.:

We have reviewed the accompanying balance sheet ofGoldiam USA, Inc. as of March 31, 2010, and the relatedstatements of operations, accumulated deficit, and cashflows for the year then ended, in accordance withStatements on Standards for Accounting and ReviewServices issued by the American Institute of Certified PublicAccountants. All information included in these financialstatements is the representation of the management ofGoldiam USA, Inc.

A review consists principally of inquiries of companypersonnel and analytical procedures applied to financial data.It is substantially less in scope than an audit in accordancewith auditing standards generally accepted in the UnitedStates of America, the objective of which is the expressionof an opinion regarding the financial statements taken as awhole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any materialmodifications that should be made to the accompanyingfinancial statements in order for them to be in conformitywith accounting principles generally accepted in the UnitedStates of America.

Our review was made for the purpose of expressing limitedassurance that there are no material modifications thatshould be made to the basic financial statements in orderfor them to be in conformity with accounting principlesgenerally accepted in the United States of America.The supplementary information included in theaccompanying financial statements is presented only forsupplementary analysis purposes. Such information hasnot been subjected to the inquiry and analytical proceduresapplied in the review of the basic financial statements, butwas compiled from information that is the representation ofmanagement, without audit or review. Accordingly, we donot express an opinion or any other form of assurance onthe supplementary information.

PRAJAPATI ASSOCIATES LLPDate: April 28, 2010 Certified Public Accountants

BALANCE SHEET March 31, 2010Amount Amount

US$ US$ASSETS

Current assetsCash 63,486Accounts receivable, net of allowances for 496,877doubtful accounts and credits of $ 10,000Inventories 2,543,893Prepaid expenses 22,287

3,126,543Property and equipment, net of accumulated

depreciation of $ 17,629 31,346

Other assetsDeposits 17,084

3,174,973

LIABILITIES AND STOCKHOLDER'S DEFICIENCYCurrent liabilities

Accounts payable 3,106,815Advance payments from customer 9,000Accrued expenses and taxes 66,985

3,182,800Stockholder's deficiency

Common stock, $0.01 per value1,000 shares authorised,200 shares issued and outstanding 2Additional paid-in capital 179,998Accumulated deficit (187,827)

(7,827)

3,174,973

See accountants' review report and notes to financial statements.

Goldiam USA, Inc.

133

134

Goldiam USA, Inc.

STATEMENT OF OPERATIONS AND ACCUMULATED DEFICITFor the year ended March 31, 2010

AmountUS$

Net sales 2,789,694

Cost of sales 2,498,367

Gross profit 291,327

Operating expenses 377,834

Loss from operations (86,507)

Provision for income taxes 322

Net loss (86,829)Accumulated deficit - beginning (100,998)

Accumulated deficit - end (187,827)


STATEMENT OF CASH FLOWSFor the year ended March 31, 2010

Amount AmountUS$ US$

Cash flows from operating activitiesNet loss (86,829)Adjustments to reconcile net loss to net cashprovided by operating activities

Depreciation 11,997Changes in assets and liabilities :Accounts receivable (360,134)Inventories (1,194,706)Prepaid expenses (5,395)Accounts payable 1,630,178Advance payments from customer 9,000Accrued expenses and taxes 57,989

148,929

Net cash provided by operating activities 62,100

Cash flows from investing activities —Cash flows from financing activities —

Net change in cash 62,100Cash at beginning 1,386

Cash at end 63,486

Supplemental disclosure of cash flows informationCash paid for interest —

Cash paid for income taxes 322


135


NOTES TO FINANCIAL STATEMENTS MARCH 31, 2010

Note 1 Organization and nature of business

Goldiam USA, Inc. (the "Company") is a wholly ownedsubsidiary of Goldiam International Limited, a companybased in India. The Company was incorporated in theState of New York on July 31, 2008. The Company isan importer and wholesaler of diamonds and jewelerywhose customers are located primarily throughout theUnited States of America.

Note 2 Summary of significant accounting policies

Basis of accounting

The Company's accounting policies are in accordancewith accounting principles generally accepted in theUnited States of America. Outlined below are thosepolicies considered particularly significant.

Use of estimates

The preparation of financial statements in conformitywith accounting principles generally accepted in theUnited States of America requires management to makecertain estimates and assumptions that could affect theamounts reported in the financial statements andaccompanying notes. Actual results could differ fromthese estimates.

Concentration of credit risk

Financial instruments, which potentially subject thecompany to significant concentrations of credit risk,include cash and accounts receivable. The Companyhold no collateral for these financial instruments.The Company maintains cash in financial institutions thatare insured by the Federal Deposit InsuranceCorporation up to a specified amount. Such cashbalances at times may exceed these limits. To minimizeits credit risk with respect to accounts receivable,management monitors the creditworthiness of thecustomers and reviews the outstanding receivables atperiod end, as well as establishes an allowance fordoubtful accounts as deemed necessary.

Accounts receivable

Accounts receivable are stated at original amount lessal lowances for doubtful accounts and credits.The allowances for doubtful accounts and credits aredetermined through an analysis of the aging of accountsreceivable at the date of the financial statements,assessments of collectability based on an evaluation ofhistoric and anticipated trends, the financial conditionof the Company's customers, and an evaluation of theimpact of economic conditions.

Inventories

Inventories are stated at the lower of cost or market,with cost being determined under the FIFO (First-in,First-out) method.

Property, plant and equipment

Property, plant and equipment are reflected at cost.Depreciation is provided using the straight-line or anaccelerated method over the estimated useful lives ofthe assets. Repairs and maintenance are expensedwhen incurred.

Long-lived assets

The Company periodically evaluates the carrying valueof long-lived assets to be held and used whenever eventsand circumstances indicate that the carrying value of theasset may no longer be recoverable. An impairment loss,measured based on the fair value of the asset, isrecognised if expected future undiscounted cash flowsare less than the carrying value of the assets.

Revenue recognition

Sales are recorded when merchandise is shipped andtitle and risk of loss are transferred to customers.Sales is recorded net of estimated discounts, returnsand allowances which are estimated based on historictrends and an evaluation of current economic conditions.

Advertising and promotional expenses

Advertising and promotional expenses are expensedduring the year in which they are incurred. For the yearended March 31, 2010, advertising and promotionalexpenses amounted to US$ 18,729.

Shipping and handling costs

The Company includes shipping and handling costsassociated with outbound freight in operating expenses.For the year ended March 31, 2010, shipping andhandling costs amounted to US$ 22,732.

Income taxes

The Company provides for income taxes based ondifferences between the financial statement and taxbases of assets and liabilities at enacted rates in effectin the years in which the differences are expected toreverse. Valuation allowances are established whennecessary to reduce deferred tax assets to the amountexpected to be realised.

As of April 1, 2009, the Company adopted FASBInterpretation No. 48, "Accounting for Uncertainty inIncome Taxes". The Company does not believe it hasany uncertain tax positions that would qualify for eitherrecognition or disclosure in the financial statements.

New authoritative accounting pronouncements

In May 2009, the FASB issued SFAS No. 165,"Subsequent Events". SFAS 165 establishes generalstandards of accounting and disclosure of events thatoccur after the balance sheet date but before financialstatements are issued or available to be issued.The Company adopted SFAS No. 165 on March 31, 2010.

136

Goldiam USA, Inc.

The Company evaluated the need for disclosure and / oradditional adjustments resulting from subsequent eventsthrough April 28, 2010, the date the financial statementswere available to be issued. The Company did not identifyany further subsequent events that required disclosureand /or adjustments in the financial statements.

The Company does not anticipate the adoption of otherrecently issued accounting pronouncements to have asignificant impact on the Company’s financial statements.

Note 3 InventoriesAt March 31, 2010, inventories of US$ 2,543,893consisted of loose diamonds, work-in-process andfinished jewelry.

Note 4 Property and equipmentAt March 31, 2009, property and equipment consistedof the following :

Furniture and equipment US$ 48,975Less : accumulated depreciation US$ 17,629

US$ 31,346

Note 5 Income taxesFor the year ended March 31, 2010, the net provisionfor income taxes of US$ 322 consisted of the following:

StateFederal and Local Total

Current US$ — US$ 322 US$ 322Deferred — — —

US$ — US$ 322 US$ 322

At March 31,2010, the significant components of the netdeferred tax assets and liabilities were the allowancesfor doubtful accounts and credits, differences between

the book and tax bases of property and equipment andnet operating loss carry forwards, which were offset infull by a valuation allowance. At March 31, 2010, theCompany had approximately US$180,000 of netoperating loss carry forwards for income tax purposes.These losses are available to offset future taxableincome and expire at various dates.

Note 6 Related party transactions and balancesIn the ordinary course of business, the Company hadthe following related party transactions and balances :

Net sales US$ 664,027Net purchases US$ 3,285,578Accounts receivable US$ 299,359Accounts payable US$ 2,649,804

Note 7 LeaseThe Company is obligated under a long-term operatinglease for the rental of office space, which expires onSeptember 30, 2011. In addition to minimum rentalpayments, the lease requires payment of various expensesincidental to the use of property. For the year endedMarch 31, 2010, rent expense amounted to US$ 32,861.

At March 31, 2010, the future minimum rentalcommitments were as follows :

March 31, 2011 US$ 34,168September 30, 2011 US$ 17,084

US$ 51,252

Note 8 Major customers and vendorsFor the year ended March 31, 2010, sales to threecustomers represented approximately 51% of net salesand purchases from two vendors representedapproximately 88% of net purchases.

STATEMENT OF OPERATING EXPENSESFor the year ended March 31, 2010

AmountUS$

Operating expensesSalaries 130,000Payroll taxes 10,771Payroll processing charges 2,186Rent and utilities 34,629Telephone 10,090Trade shows 27,418Shipping expenses 22,732Insurance 5,179Travel 40,628Advertising and promotional expenses 18,729Office supplies and expenses 7,834Designing charges 1,200Computer software expenses 1,156Dues and subscriptions 4,914Security system expenses 2,594Professional fees 45,777Depreciation 11,997

377,834


137


AUDITORS'’ REPORT

TO THE MEMBERS OF GOLDIAM USA, INC.

We have audited the attached Balance Sheet of GOLDIAMUSA, INC. (Company Incorporated out of India) as at31st March, 2010 and also the Profit and Loss Account of theCompany for the year ended on that date annexed theretoand Cash Flow Statement for the year ended on that date.These financial statements are the responsibility of theCompany’s management. Our responsibility is to expressan opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material mis-statement. An auditincludes examining on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accounting principlesused and significant estimates made by management, aswell as evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

This report does not include a statement on the mattersspecified in paragraph 4 of the Companies (Auditor’sReport) Order, 2003, issued by the Department of CompanyAffairs, in terms of section 227 (4A) of the CompaniesAct, 1956, since in our opinion and according to theinformation and explanations given to us, the said Order isnot applicable to the Company.

Further to our comments in the Annexure referred to above,we report that:

a) We have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purpose of our audit;

b) In our opinion, proper books of accounts as requiredby law have been kept by the Company, so far as itappears from our examination of those books;

c) The Balance Sheet and Profit and Loss Account andCash Flow Statement dealt with by this report are inagreement with the books of account;

d) In our opinion, the Balance Sheet and Profit and LossAccount and Cash Flow Statement dealt with by thisreport comply with the mandatory accountingstandards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.

e) In our opinion and to the best of our informationand according to the explanations given to us, thesaid accounts read together with the SignificantAccounting Policies and notes thereon, give theinformation required by the Companies Act, 1956 inthe manner so required and give a true and fair viewin conformity with the accounting principles generallyaccepted in India.

i) in the case of Balance Sheet, of the state of affairsof the Company as at 31st March, 2010;

ii) In the case of Profit and Loss Account, of the lossof the Company for the year ended on that date;and

iii) in the case of Cash Flow Statement, of thecash flows of the Company for the year endedon that date.



138

Goldiam USA, Inc.


Sch No. As on As on31st March, 2010 31st March, 2009

Rupees Rupees Rupees RupeesI SOURCES OF FUNDS:

1 SHAREHOLDERS FUND:

a) SHARE CAPITAL 1 102 102

b) RESERVES AND SURPLUS 2 9,170,898 9,170,898

9,171,000 9,171,0002 LOAN FUNDS :

a) SECURED LOANS — —

b) UNSECURED LOANS — —— —

TOTAL Rs. 9,171,000 9,171,000

II APPLICATION OF FUNDS :

1 FIXED ASSETS 3

GROSS BLOCK 2,495,276 2,495,276

LESS : DEPRECIATION 828,495 286,950NET BLOCK 1,666,781 2,208,326

2 INVESTMENTS — —

3 TRANSLATION RESERVES 498,478 7,274,841

4 CURRENT ASSETS, LOANS AND ADVANCES 4

a) INVENTORIES 114,831,340 61,946,504

b) SUNDRY DEBTORS 22,065,922 6,967,056

c) CASH AND BANK BALANCES 2,865,779 70,617

d) LOANS AND ADVANCES 1,777,187 1,731,077

141,540,228 70,715,2545 CURRENT LIABILITIES AND PROVISIONS 5

a) CURRENT LIABILITIES 143,671,592 75,693,001

b) PROVISIONS — —

143,671,592 75,693,001

NET CURRENT ASSETS (2,131,364) (4,977,747)

PROFIT AND LOSS ACCOUNT 6 9,137,105 4,665,580

TOTAL Rs. 9,171,000 9,171,000

NOTES ON ACCOUNTS 9

Schedules referred to above form an integral part of Balance SheetAs per our report of even dateFor Pulindra Patel & Co. For and on behalf of the BoardChartered Accountants

Pulindra M. Patel Rashesh M. BhansaliProprietor DirectorMembership No. 48991Place : Mumbai Place : MumbaiDate : 28th May, 2010 Date : 28th May, 2010

139



Schedules referred to above form an integral part of Profit and Loss AccountAs per our report of even dateFor Pulindra Patel & Co. For and on behalf of the BoardChartered Accountants

Pulindra M. Patel Rashesh M. BhansaliProprietor DirectorMembership No. 48991


Sch No. For the year For the periodended 31.03.2010 ended 31.03.2009

Rupees RupeesI INCOME :

SALES 125,549,923 25,661,398

INCREASE / DECREASE IN STOCK 7 52,884,836 61,946,504

TOTAL Rs. 178,434,760 87,607,903

II EXPENDITURE :

PURCHASE OF FINISHED GOODS 165,001,460 84,384,973

EMPLOYEES’ COST 6,164,604 2,984,407

ADMINISTRATIVE, SELLING & OTHER EXPENSES 8 11,183,407 4,575,830

DEPRECIATION 3 541,545 286,950

TOTAL Rs. 182,891,015 92,232,161

III PROFIT :

PROFIT / (LOSS) BEFORE TAX (4,456,256) (4,624,258)

LESS : PROVISION FOR TAXATION — —

CURRENT TAX 15,269 41,323

PROFIT / (LOSS) AFTER TAX (4,471,525) (4,665,580)

BALANCE BROUGHT FORWARD (4,665,580) (4,665,580)

PROFIT / (LOSS) AVAILABLE FOR APPROPRIATION (9,137,105) (9,331,160)

BALANCE CARRIED FORWARD TO BALANCE SHEET (9,137,105) (9,331,160)

TOTAL Rs. (9,137,105) (9,331,160)

NOTES ON ACCOUNTS 9

Earning Per Share (Face Value US$ 0.01)

Basic (22,358) (23,328)

Diluted (22,358) (23,328)

140

Goldiam USA, Inc.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010




2009-10 2008-09Rupees Rupees

A. CASH FLOW FROM OPERATING ACTIVITIES:

NET PROFIT / (LOSS ) BEFORE TAX AND EXTRAORDINARY ITEMS (4,456,258) (4,624,258)

ADJUSTMENT FOR:

Depreciation (Schedule 3) 541,545 286,950

Allowance for Doubtful Debts — 509,500

Tranlation Reserve 6,776,364 (7,274,841)

Provision For Tax (15,269) (41,323)

7,302,639 (6,519,714)

2,846,381 (11,143,972)

OPERATING PROFIT BEFORE

WORKING CAPITAL CHANGES

ADJUSTMENT FOR:

Trade and other Receivable 15,098,866 (9,207,631)

Inventories 52,884,836 (61,946,504)

Trade Payable (67,993,598) 75,693,001

(9,896) 4,538,866

CASH GENERATED FROM OPERATIONS 2,836,486 (6,605,106)

Direct Taxes Paid (41,323) —

CASH FLOW BEFORE EXTRAORDINARY ITEMS 2,795,163 (6,605,106)

NET CASH FROM OPERATING ACTIVITIES

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets — (2,495,276)

NET CASH USED IN INVESTING ACTIVITIES — (2,495,276)

2,795,163 (9,100,382)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issue of Share Capital including Security premium — 9,171,000

NET CASH USED IN FINANCING ACTIVITIES — 9,171,000

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,795,163 70,617

CASH AND CASH EQUIVALENTS AS AT 01.04.09 70,617 —

CASH AND CASH EQUIVALENTS AS AT 31.03.10 2,865,779 70,617

141


SCHEDULES FORMING PART OF THE BALANCE SHEET AS ON 31ST MARCH, 2010

SCHEDULE “3”FIXED ASSETS : (Amount in Rupees)

GROSS BLOCK DEPRECIATION NET BLOCKParticulars Opening Addition Deduction Cost as on Opening For the Deduction As on As on As on

Balance 31.03.2010 Depreciation Period 31.03.2010 31.03.2010 31.03.2009Furniture & Fixtures 2,495,276 — — 2,495,276 286,950 541,545 828,495 1,666,781 2,208,326Total Rs. 2,495,276 — 2,495,276 286,950 541,545 — 828,495 1,666,781 2,208,326Figures of Previous year — 2,495,276 — 2,495,276 — 286,950 — 286,950 2,208,326 —

As on 31st March, 2010 As on 31st March, 2009Rupees Rupees Rupees Rupees

SCHEDULE “1”SHARE CAPITAL :AUTHORISED CAPITAL1000 Equity Shares of US$ 0.01 value each 500 500

Total Rs. 500 500ISSUED CAPITAL200 Equity Shares of US$ 0.01 value each 102 102

Total Rs. 102 102

Subscribed and Paid up Capital200 Equity Shares of US$ 0.01 value each 102 102

Total Rs. 102 102

Note : [of the above 200 Equity shares (Previous Year Nil)are held by Holding Company Goldiam International Limited]

SCHEDULE “2”RESERVES AND SURPLUS :Securities PremiumOpening Balance 9,170,898 —Add : Received during the year — 9,170,898

9,170,898 9,170,898

Total Rs. 9,170,898 9,170,898


SCHEDULE “4”CURRENT ASSETS, LOANS AND ADVANCESCURRENT ASSETS :a) INVENTORIES

Finished Goods (at cost or net realizable 114,831,340 61,946,504value whichever is less)

114,831,340 61,946,504b) SUNDRY DEBTORS

(Unsecured, considered good)Outstanding for a period exceeding six month 159,119 —Other Debts 21,906,803 6,967,056

22,065,922 6,967,056c) CASH AND BANK BALANCES

Cash on Hand — 70,617 70,617Balance with Schedule & Unscheduled Bank inCurrent Accounts 2,865,779 —

2,865,779 70,617d) LOANS AND ADVANCES

(Advances recoverable in cash or in kind or forvalue to be received)Loans and Advances 1,006,015 860,647Security & Other Deposit 771,172 870,430

1,777,187 1,731,077

Total Rs. 141,540,228 70,715,254

142

Goldiam USA, Inc.

SCHEDULES FORMING PART OF THE PROFIT & LOSS A/C FOR THE YEAR

ENDED 31ST MARCH, 2010

For the year For the periodPARTICULARS ended 31.03.2010 ended 31.03.2009

Rupees Rupees Rupees RupeesSCHEDULE : “7”INCREASE / DECREASE IN STOCK :

Closing Stock :Finished Goods 114,831,340 61,946,504

114,831,340 61,946,504Less : Opening StockFinished Goods 61,946,504 —

61,946,504 —

Total Rs. 52,884,836 61,946,504

SCHEDULE : “8”ADMINISTRATIVE & OTHER EXPENSES :

Payroll Taxes 614,413 302,481Rent 1,642,066 784,394Telephone 478,490 193,344Exhibition expenses 1,300,173 312,215Shipping expenses 1,077,922 496,284Insurance 245,596 86,777Travelling expenses 1,926,562 292,196Office expenses 340,251 252,573Computer Software expenses 54,813 98,761Membership & Subscription 233,032 92,884Security System expenses 123,026 54,638Professional Fees 1,716,604 1,218,281Repairs & Maintenance — 104,454Bank Charges 31,259 —Printing & Stationery — 56,979Marketing & Sales Promotion 888,132 —Bad debts — 229,570Legal expenses 454,163 —Designing expenses 56,904 —

11,183,407 4,575,830

Total Rs. 11,183,407 4,575,830

SCHEDULE “5”CURRENT LIABILITIES AND PROVISIONS :a) CURRENT LIABILITIES

Sundry Creditors :Sundry Creditors for goods 140,647,889 75,234,655Sundry Creditors for Expenses 3,008,434 458,346

143,656,323 75,693,001Provision for Tax 15,269 —

Total Rs. 143,671,592 75,693,001

SCHEDULE “6”PROFIT AND LOSS A/C :Opening Balance 4,665,580 —Add : Loss during the year 4,471,527 4,665,580

9,137,107 4,665,580

Total Rs. 9,137,107 4,665,580


143


NOTES ATTACHED TO AND FORMING PART OF THE ACCOUNTS

1 SIGNIFICANT ACCOUNTING POLICIES :

A) BASIS OF PREPARATION OF ACCOUNTS :The accounts have been prepared to comply in allmaterial aspects with applicable accountingprinciples in India, mandatory Accounting standardsnotified by the Companies (Accounting Standard)Rule, 2006 and the relevant provisions of theCompanies Act, 1956. The Financial Statementshave been prepared under historical cost.The Accounts have been prepared on the basis ofthe Independent Accountants' Review ReportReceived from Prajapati Associates LLP, whilepreparing Accounts relevance have been kept onthe certificate provided by the management.

B) FIXED ASSETS :Tangible Fixed Assets are stated at cost. They arestated at historical cost less accumulateddepreciation.

C) DEPRECIATION :Depreciation on Fixed Assets is provided onStraight Line method over the estimated useful livesof the assets.

D) IMPAIRMENT OF ASSETS :i) The carrying amounts of assets are reviewed

periodically for indicators of impairment basedon internal / external factors. An Impairment lossis recognised wherever the carrying amount ofan asset exceeds its recoverable amount.

ii) After Impairment, depreciation is provided onthe revised carrying amount of the assets.

iii) A previously recognised impairment loss isincreased or reversed depending on changesin circumstances. However, the carrying valueafter reversal is not increased beyond thecarrying value that would have prevailed bycharging usual depreciation if there was noimpairment.

E) INVENTORIES :i) Inventories are valued at cost or at net

realisable value whichever is lower determinedon First in First out Method.

F) REVENUE RECOGNITION :Sales are recorded when merchandise is shippedand tit le and risk of loss are transferred tocustomers. Sales is recorded net of estimateddiscounts and allowances which are estimatedbased on historic trends and an evaluation ofcurrent economic condition.

G) LEASE :The Company is obligated under a long-termoperating lease for the rental of office space, whichexpires on September, 2011. In addition to minimumrental payments, the lease required payment ofvarious expenses incidental to the use of property.

H) EARNING PER SHARE :Basic earnings per share are calculated by dividingthe net profit or loss for the year attributable to

equity shareholders by the weighted averagenumber of equity shares outstanding during theyear. For the purpose of calculating diluted earningsper share, the net profit or loss attributable to equityshareholders and the weighted average number ofshares outstanding during the year are adjusted forthe effects of all dilutive potential equity shares.

I) PROVISION FOR CURRENT AND DEFERRED TAX:Tax expenses comprise of Current Tax.Deferred income tax reflects the impact of currentyear timing differences between taxable income /losses and accounting income for the year andreversal of timing differences of earlier years.Deferred tax is measured on the tax rates and taxlaws enacted or substantively enacted as at thebalance sheet date. Deferred tax assets arerecognized only to the extent that there isreasonable certainty that sufficient future taxableincome will be available against which suchdeferred tax assets can be realized. In respect ofcarry forward losses deferred tax assets arerecognised only to the extent there is virtualcertainty that sufficient future taxable income willbe available against which such losses can besetoff.

J) SEGMENT INFORMATION :The Company has one business segment viz.Jewellery Marketing.

K) PROVISIONS / CONTINGENCIES :A provision is recognised when an enterprise hasa present obligation as a result of past event and itis probable that an outflow of resources will berequired to settle the obligation, in respect of whicha reliable estimate can be made. Provisionsare not discounted to its present value andare determined based on management estimaterequired to settle the obligation at the balancesheet date. These are reviewed at each balancesheet date and adjusted to reflect the currentmanagement estimates.

2 Estimated amount of Contracts remaining to beexecuted on Capital Account and not provided forRs.nil. (Previous year Rs.nil.)

3 IN THE OPINION OF THE DIRECTORS:a) The Current Assets and Loans & Advances are

approximately of the value stated, if realisedin the ordinary course of business.

b) The provision for depreciation and for all knownliabilities is adequate and not in excess of theamount reasonably necessary.

4 QUANTITATIVE DETAILS :

Opening Purchase Sales / ClosingStock Returns Stock

JEWELLERY 7103 10287 8565 8825(—) (9224) (2121) (7103)

144

Goldiam USA, Inc.

Sr. Nature of Transaction Holding Company Fellow Subsidiary Joint Venture ofNo. Holding Company

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09i) Investment in Capital (Issue of Shares) — 7,200,000 — — — —ii) Sale of goods 15,480,945 2,071,026 7,322,449 — — —iii) Purchase of goods 19,715,838 31,704,477 133,994,479 24,167,032 — —I) Outstanding Receivables

as on 31st March 13,592,125 1,656,365 520,401 — — —II) Outstanding Payables

as on 31st March 12,864,449 18,307,176 111,649,913 33,596,807 — —

Sr. Nature of Transaction Holding Fellow Subsidiary Joint Venture ofNo. Company Holding Company

Goldiam Goldiam Goldiam Goldiam GoldiamInternational Jewels Jewellery HK HK

Limited Limited Limited Limited Limitedi) Investment in Capital

(Issue of Shares) — — — — —(7,200,000) (—) (—) (—) (—)

ii) Sale of goods 15,480,945 411,448 4,640,389 2,270,612 —(2,071,026) (—) (—) (—) (—)

iii) Purchase of Goods 19,715,838 7,335,934 126,658,545 — —(31,704,477) (188,998) (23,978,034) (9,429,775) (—)

I) Outstanding Receivables as on 31st March 13,592,125 411,448 108,953 — —(1,656,365) (—) (—) (—) (—)

II) Outstanding Payables as on 31st March 12,864,449 3,894,982 107,754,931 — —(18,307,176) (188,998) (23,978,034) (9,429,775) (—)

5 Related party disclosures :1) List of related parties and relationship where control exists or with whom transactions were entered into :

Name of the Related Party RelationshipHolding Company Goldiam International LimitedFellow subsidiary Goldiam Jewels Limited

Goldiam Jewellery LimitedGoldiam HK Limited (upto 22.07.2009)

Joint Venture of Holding Company Goldiam HK Limited (from 23.07.2009)




6 EARNING PER SHARE :Particulars 2009-2010 2008-2009Profit after Tax (4,471,527) (4,665,580)Weighted Avg. no. of shares+potential shares outstanding 200 200Earning per share (Basic) (22,358) (23,328)Earning per share (Diluted) (22,358) (23,328)

7 Remuneration to Auditors:

Particulars 2009-2010 2008-2009

As Auditors 142,260 152,850

Total Rs. 142,260 152,850

8 The Functional currency of the Company isUS Dollar. In preparing Financial statement allmonetary and non-monetary assets and liabilitiesare translated using exchange rate as at theBalance sheet date. Cost and Expenses aretranslated using average of Exchange rates duringthe reporting period.

9 Previous Year figures have not been provided asthis being the first year of operations.

145


BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE :

1. Balance Sheet Date 3 1 0 3 2 0 1 0

2. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)


N I L N I L

3. DEPLOYMENT OF FUNDS (Amount in Rs. Thousands)


9 1 7 1 . 0 0 9 1 7 1 . 0 0


0 . 0 1 9 1 7 0 . 9 0


N I L N I L


N I L


1 6 6 6 . 7 8 N I L

Deferred Tax assets Translation Reserves

N I L 4 9 8 . 4 8


( 2 1 3 1 . 3 6 ) N I L

Accumulated Losses

9 1 3 7 . 1 1

4. PERFORMANCE OF COMPANY (Amount in Rs. Thousands)

Turnover / Income Total Expenditure

1 2 5 5 4 9 . 9 2 1 3 0 0 0 6 . 1 8


( 4 4 5 6 . 2 6 ) ( 4 4 7 1 . 5 3 )


( 2 2 3 5 7 . 6 3 ) 0 0



146

OOO Tiara Jewels

REPORT OF AUD I T ING COMPANY AF "DOBR IN IN

AND CO" LTD. TO THE EXECUTIVE AUTHORITY OF "TIARA

JEWELS" LTD.

1. We have conducted the audit of financial statements, pertaining to"Tiara Jewels" Ltd. for the period ended on 31st March, 2010.

Constitutive documents, contracts with Contractors, cash reports,quarterly and annual taxation and financial statements, purchaseand sales ledgers were subjected to complete checking. Remainingdocuments were subjected to selective checking, which includethe following: reports for rendered services, way bills, invoices,advance statements, wage payment and salary accountingdocuments, material write-off documents etc.

Accounting and tax ledgers were checked.

2. While planning and conducting the financial audit, specified in thefirst paragraph of present section, we have inspected the internalchecking level at "Tiara Jewels" Ltd. Responsibility for organizationand level of internal checking lies on the executive authority of"Tiara Jewels" Ltd.

3. We have inspected the internal checking level exclusively fordetermining the amount of works, required for making the auditor'sconclusion about the authenticity of financial statements. Theperformed works during the audit don't mean that a complete andend-to-end checking of the internal control system of "Tiara Jewels"has been conducted with an aim to identify all the possibleshortcomings.

4. During the audit, we haven't identified any facts, based on whichone may draw a conclusion about the non-compliance of internal

control system of "Tiara Jewels" Ltd. considering the scope andnature of its activities.

5. Our opinion about the authenticity of financials, specified in firstparagraph of present section, is mentioned in the subsequentportion of auditor's conclusion. We haven't identified any seriousviolations against the established financial accounting procedureand preparation of financial statements, which may substantiallyaffect the authenticity of financial statements.

6. While conducting the financial audit, specified in first paragraph ofpresent section, we have checked whether the "Tiara Jewels" Ltd.is following the Russian Federation legislation, applicable whileexecuting financial & economic operations. Responsibility forfollowing the Russian Federation legislation, applicable whileexecuting financial & economic operations, lies on the executiveauthority of "Tiara Jewels" Ltd.

7. We have checked the compliance of a number of financial-and-economic operations, executed by "Tiara Jewels" Ltd., to theapplicable legislation inclusively so as to get sufficientconfidence about the fact that the financial accounting doesn'thave any material misstatements. However, the purpose offinancial accounting audit, conducted by us, was not to expressany opinion about total compliance of "Tiara Jewels" Ltd.activities to the legislation. Hence, we are not expressing anysuch opinion.

8. Results of the checks, conducted by us, show that the inspectedfinancial-and-economic activities were carried out by "Tiara Jewels"Ltd. in all material respects in accordance with the legislation,specified in the previous paragraph of present section.

disclosure of information in them about financial-and-economicactivities, assessment about the observance of principles and rulesof financial accounting, used during the preparation of financialstatements, examination of main evaluation indices, obtained by themanagement of Auditee, and also the evaluation of financialstatement presentations. We assume that the conducted auditprovides sufficient grounds for expressing our opinion about theauthenticity of financial statements and compliance of financialaccounting procedure to the legislation of Russian Federation.

Minor violations in financial accounting procedure and in thepreparation of financial statements were identified during thechecking. These violations are mentioned in the research note, whichis an Enclosure to the present conclusion.

The nature of errors is not systematic, and their size doesn't exceedthe materiality guideline, set for present organization.

In our opinion, the financial statements, attached to the presentConclusion, with corrections that are mentioned in the enclosureto present Conclusion and are to be reflected in the financialstatements for the period ended on 31st March, 2010 - are authentic,i.e. they are prepared in such a way, so as to ensure the reflectionof assets and liabilities of "Tiara Jewels" Ltd. in all material respectsas of 1st January 2009 and the financial results of its activities forthe year ended March, 31st 2010 based on the Federal Law ofRussian Federation, No.129-FZ "For financial accounting", dated21st November 1996 (Passed by the State Duma (Council) on23rd February 1996, approved by the Board of Federation on20th March 1996).

Managing Director of auditing companyAF "Dobrinin and Co" Ltd. Place for Seal) (Dobrinin A.V.)Auditor (Ignatkova M.V)10th May 2010

CONCLUSION OF AUDITOR'S COMPANY TO THE MEMBERS OF

"TIARA JEWELS LTD." ABOUT FINANCIAL STATEMENTS OF

"TIARA JEWELS" LTD. FOR THE PERIOD ENDED AS ON

31st MARCH, 2010.

1. We have conducted the audit of enclosed financial statements of"Tiara Jewels" Ltd. for the period ended as on 31st March, 2010.

Financial statements of "Tiara Jewels" Ltd. consist of:— balance sheet;— profit & loss statement.

Present statements were prepared by the executive authority of "TiaraJewels" Ltd. based on the Federal Law of Russian Federation,No.129-FZ "for financial accounting", dated 21st November 1996(Passed by the State Duma (Council) on 23rd February 1996,approved by the Board of Federation on 20th March 1996).

2. Responsibility for preparing the present statements lies on theexecutive authority of "Tiara Jewels" Ltd. Our duty is to express anopinion about the authenticity of present statements in all materialrespects and the compliance of financial accounting procedure tothe legislation of Russian Federation based on the conducted audit.

3. We performed the audit in accordance with:— Federal law "for auditing activities";— federal rules (standards) for auditing activities;— Internal rules (standards) for auditing activities of "Tiara Jewels" Ltd.

Audit was planned and conducted in such a way, so as to obtain areasonable confidence about the fact that the financial statementsdo not contain any material misstatements. Audit was conductedselectively and it contained the analysis based on the testing ofevidences that confirm index numbers in financial statements and

147


CODESForm No.1 as per OKUD 0710001Date (year, month, date) 2010 | 3 | 31

Organization “OOO Tiara Jewels” as per OKPO 84832556Tax Payer Id. TPI 7736572634Type of activity wholesale trade of Jewelry as per OKVED 51.7Business legal structure / Ownership patternLimited Liability as per OKOPF/OKFS 65 27CompanyUnit of measurement Rubles (in thousands) as per OKEI 384

Location (Address)105120, Moscow, street – Verkhnaya Siromyatnicheskaya, H.No.2

Date of approval 31-3-2010Date of dispatch / receipt 31-3-2010

ASSETSIndication At the beginning At the end of

code of financial year financial year

1 2 3 4

I. Fixed assetsIntangible assets 110 — —Capital assets 120 — 46Uncompleted construction works 130 97 —Income yielding investments into tangible assets 135 — —Long-term financial investments 140 — —Deferred tax assets 145 — 112Other fixed assets 150 — —

Total for section I 190 97 158

II. Current assetsSupplies 210 1622 —including:raw material, materials and other similar valuables 211 71 —rearers and fatteners 212 — —costs for uncompleted production 213 — —finished products and goods for resale 214 — 313goods delivered 215 — 1540expenditures for future periods 216 1551 —other supplies and expenditures 217 —Input value added tax 220 — 13Accounts receivable (payments of which are expectedafter more than 12 months from the balance sheet date) 230 —including:buyers and customers 231 —Accounts receivable (payments of which are expectedwithin 12 months from the balance sheet date) 240 — 1025including:buyers and customers 241 — —Short-term financial investments 250 — —Cash assets 260 130 953Other current assets 270 — —

Total for section II 290 1752 3843

BALANCE (total for lines 190 + 290) 300 1849 4000


148

OOO Tiara Jewels

LIABILITIESLine At the beginning At the end ofcode of financial year financial year

1 2 3 4

III. Capital and reservesCharter capital 410 10 10Owned assets, purchased from shareholders 411 — —Surplus 420 — —Capital reserves 430 — —including:surplus (reserve) funds, formed in accordance with legislation 431 — —reserves, formed in accordance with constitutivedocuments. 432 — —Undistributed profit (uncovered loss) 470 (61) 167

Total for section III 490 (61) 176

IV. Long-term liabilitiesBorrowings 510 — 2965Deferred tax liabilities 515 — 9Other long-term liabilities 520 — —

Total for section IV 590 1900 2974

V. Short-term liabilitiesBorrowings 610 — —Payables 620 — 518including:suppliers and contractors 621 — 370staff payable 622 — 70payable to State non-budgetary funds 623 — 47tax payable 624 — 31other payables 625 — 333Dividends payable 630 — —Unearned revenues 640 — —Reserves for future expenses 650 — —Other short-term liabilities 660 — —

Total for section V 690 — 851

BALANCE (total for lines 490 + 590 + 690) 700 1849 4000

CERTIFICATE FOR VALUABLES, ACCOUNTEDIN OFF BALANCE SHEET ACCOUNTS

Leased fixed assets 910 — —including the lease value 911 — —Goods and materials accepted for custody 920 — —Goods accepted on commission 930 — —Bad debt write-off 940 — —Securities received for obligations and payments 950 — —Securities given for obligations and payments 960 — —Depreciation of housing funds 970 — —Depreciation of land improvement facilities andother similar facilities 980 — —Intangible assets, received for usage 990 — —

Executive head SARIN GIRISH Chief accountant SARIN GIRISH(Name) (Name)

10th May 2010

149


Factor For the accounting For the same periodDescription code period of preceding year

1 2 3 4Income & expenditures for general activitiesProceeds (net) from sales of goods, products,works, services (minus value added tax,excise duties and similar mandatory payments) 010 1493 185Cost price of sold goods, products, works, services 020 (337) —Exchange profit 029 1156 185Commercial expenditures 030 (704) (246)Management expenses 040 — —Profit (loss) from sales 050 452 (61)

Other income and expendituresInterest receivable 060 — —Outstanding [due] interest 070 (333) —Income from stake in other organizations 080 —Other income 090 146 —Other expenditures 100 (46) —

Profit (loss) before taxation 140 219 (61)Deferred tax assets 141 (112) —Deferred tax liabilities 142 9 —Current profit tax 150 112 —

180 — —Net profit (loss) for the accounting period 190 228 (61)

REFERENCE:Constant Tax Liabilities 200 — —Basic earnings (loss) per share 201 — —Diluted earnings (loss) per share 202 — —

INTERPRETATION OF INDIVIDUAL PROFITS AND LOSSES

Factor For the accounting For the sameperiod period of

preceding year

Description Code Profit Loss Profit Loss

1 2 3 4 5 6Fines, penalties and forfeits, admitted or for which arecovery judgment has been given by the court(arbitration court) 210 — — — —Profit (loss) of previous years 220 — — — —Compensation for damages, caused by thenon-execution or improper execution of obligations 230 — — — —Exchange rate differences for the operations inforeign currency 240 144 29 — —Allocations to valuation reserves 250 — — — —Writing-off of receivable and payables, for whichlimitation of actions has been expired. 260 — — — —

270 — — — —

Executive head SARIN GIRISH Chief accountant SARIN GIRISH(Name) (Name)

10th May 2010

PROFIT & LOSS STATEMENT FOR THE PERIOD JANUARY 2009 - MARCH 2010CODES

Form No. 2 as per OKUD 0710002Date (year, month, date) 2010 | 3 | 31

Organization “OOO Tiara Jewels” as per OKPO 84832556Tax Payer Id. TPI 7736572634Type of activity wholesale trade of Jewelry as per OKVED 51.7Business legal structure / Ownership patternLimited Liability as per OKOPF/OKFS 65 27CompanyUnit of measurement Rubles (in thousands) as per OKEI 384

150

OOO Tiara Jewels

AUDITORS' REPORTTO THE MEMBERS OF OOO TIARA JEWELSWe have audited the attached Balance Sheet of 000 TIARA JEWELS.(Company Incorporated out of India) as at 31st March, 2010 and also theProfit and Loss Account of the Company for the year ended on that dateannexed thereto and Cash Flow Statement for the year ended on thatdate. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statementsare free of material mis-statement. An audit includes examining on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.This report does not include a statement on the matters specified inparagraph 4 of the Companies (Auditor's Report) Order, 2003, issued bythe Department of Company Affairs, in terms of section 227(4A) of theCompanies Act, 1956, since in our opinion and according to the informationand explanations given to us, the said Order is not applicable to the Company.Further to our comments in the Annexure referred to above, wereport that:a) We have obtained all the information and explanations which to the

best of our knowledge and belief were necessary for the purpose ofour audit;

b) In our opinion, proper books of accounts as required by law havebeen kept by the Company, so far as it appears from our examinationof those books;

c) The Balance Sheet and Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with the booksof account;

d) In our opinion, the Balance Sheet and Profit and Loss Account andCash Flow Statement dealt with by this report comply with themandatory accounting standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts read together with theSignificant Accounting Policies and notes thereon, give the informationrequired by the Companies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accounting principlesgenerally accepted in India.i) in the case of Balance Sheet, of the state of affairs of the

Company as at 31st March, 2010;ii) in the case of Profit and Loss Account, of the profit of the

Company for the period ended on that date ; andiii) in the case of Cash Flow Statement, of the cash flows of the

Company for the year ended on that date.



151



Schedules referred to above form an integral part of Balance SheetAs per our report of even dateFor Pulindra Patel & Co. For OOO Tiara JewelsChartered Accountants

Pulindra M. PatelProprietor Director DirectorMembership No. 48991


Sch No. As at 31.03.2010 As at31.12.2008


I) SOURCES OF FUNDS :

SHAREHOLDERS FUNDS :

a) Share Capital 1 15,015 15,015

b) Reserve & Surplus 273,564 —

288,579 15,015

2) LOAN FUNDS

Unsecured Loans 2 4,527,744 2,852,843

4,527,744 2,852,843

TOTAL Rs. 4,816,323 2,867,858

II) APPLICATION OF FUNDS :

1) FIXED ASSETS

GROSS BLOCK 3 70,245 —

LESS: DEPRECIATION — —

NET BLOCK 70,245 —

2) INVESTMENTS — —

3) DEFERRED TAX ASSETS 158,051 —

4) TRANSLATION RESERVE 18,870 —

5) CURRENT ASSETS, LOANS AND ADVANCES 4

a) INVENTORIES 2,828,274 —

b) SUNDRY DEBTORS 1,565,698 —

c) CASH AND BANK BALANCES 1,454,528 195,195

d) LOANS & ADVANCES 19,852 2,581,072

5,868,352 2,776,267

6) LESS: CURRENT LIABILITIES AND PROVISIONS

1) CURRENT LIABILITIES 5 1,251,245 —

2) PROVISIONS 47,950 —

1,299,195 —

NET CURRENT ASSETS 4,569,157 2,776,267

PROFIT AND LOSS ACCOUNT — 91,591

TOTAL Rs. 4,816,323 2,867,858


152

OOO Tiara Jewels

PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31ST MARCH, 2010

PARTICULARS Sch For the period For the periodNo. ended 31.03.2010 ended 31.12.2008

Rupees RupeesI) INCOME

SALES 2,395,063 —

OTHER INCOME 6 — 277,777

INCREASE/ DECREASE IN STOCK 7 2,828,274 —

TOTAL Rs. 5,223,337 277,777

II) EXPENDITURE

PURCHASE OF GOODS 3,134,702 —

ADMINISTRATION & SELLING EXPENSES 8 1,203,140 —

INTEREST & FINANCE CHARGES 9 533,997 369,368

TOTAL Rs. 4,871,839 369,368

III) PROFIT

PROFIT BEFORE TAXATION 351,498 (91,591)

PROVISION FOR TAXATION :

— CURRENT TAX 179,674 —

— DEFERRED TAX ASSETS 166,017 —

PROFIT AFTER TAXATION 365,155 (91,591)

BALANCE BROUGHT FORWARD (91,591) —

PROFIT AVAILABLE FOR APPROPRIATION 273,564 (91,591)

APPROPRIATIONS :

BALANCE CARRIED FORWARD TO BALANCE SHEET 273,564 (91,591)

TOTAL Rs. 273,564 (91,591)

Earning Per Share (Face Value 1 Ruble)

Basic 27.36 (9.16)

Diluted 27.36 (9.16)


Schedules referred to above form an integral part of Profit and Loss AccountAs per our report of even date

For Pulindra Patel & Co. For OOO Tiara JewelsChartered Accountants

Pulindra M. PatelProprietor Director DirectorMembership No. 48991Place : Mumbai Place : MumbaiDate : 28th May, 2010 Date : 28th May, 2010

153


CASH FLOW FOR THE PERIOD ENDED 31ST MARCH, 2010



PARTICULARS 31.03.2010 31.12.2008Rupees Rupees

A) CASH FLOW FROM OPERATING ACTIVITIES :

NET PROFIT / (LOSS) BEFORE TAX AND EXTRAORDINARY ITEMS 365,155 (91,591)

ADJUSTMENT FOR :

Tranlation Reserve (18,870) —

Provision For Tax 179,674 —

160,804 —

525,959 (91,591)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES

ADJUSTMENT FOR :

Trade and other Receivable 995,522 (2,581,072)

Inventories (2,828,274) —

Trade Payable 1,351,860 —

(480,892) (2,581,072)

CASH GENERATED FROM OPERATIONS 45,067 (2,672,663)

Direct Tax Paid — —

CASH FLOW BEFORE EXTRAORDINARY ITEMS 45,067 (2,672,663)

NET CASH FROM OPERATING ACTIVITIES

B) CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (70,245) —

NET CASH USED IN INVESTING ACTIVITIES (70,245) —

(25,178) (2,672,663)

C) CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from Issue of Share Capital including Security premium — 15,015

Repayment of Long Term Borrowing 1,674,901 2,852,843

NET CASH USED IN FINANCING ACTIVITIES 1,674,901 2,867,858

NET INCREASE IN CASH AND CASH EQUIVALENTS 1,649,723 195,195

CASH AND CASH EQUIVALENTS AS AT 01.01.2009 195,195 —

CASH AND CASH EQUIVALENTS AS AT 31.03.2010 1,454,528 195,195

154

OOO Tiara Jewels

SCHEDULES FORMING PART OF THE BALANCE SHEET AS ON 31ST MARCH, 2010As at 31.03.2010 As at 31.12.2008

Rupees RupeesSCHEDULE “1”

SHARE CAPITALAUTHORISED CAPITAL10000 Equity Shares of 1/- Ruble each 15,015 15015

Total Rs. 15,015 15,015

ISSUED CAPITAL10000 Equity Shares of 1/- Ruble each 15,015 15,015

Total Rs. 15,015 15,015

Subscribed and Paid up Capital10000 Equity Shares of 1/- Ruble each 15,015 15,015

Total Rs. 15,015 15,015

Note : [of the above 5100 Equity shares (Previous Year 5100) are held by Holding Company Diagold Designs Limited]

SCHEDULE “2”UNSECURED LOANS :From Shareholders 4,527,744 2852843

4,527,744 2,852,843

SCHEDULE “3”FIXED ASSETS : Amount in Rupees

Particulars GROSS BLOCK DEPRECIATION NET BLOCK

Opening Addition Deduction Cost as on Opening For the Deduction As on As on As onBalance 31.03.2010 Depreciation Period 31.03.2010 31.03.2010 31.03.2009

Capital Work- in-Progress — 70,245 — 70,245 — — — — 70,245 —

Total (A) Rs. — 70,245 — 70,245 — — — — 70,245 —

SCHEDULE “4”CURRENT ASSETS, LOANS AND ADVANCESCURRENT ASSETS :a) INVENTORIES

Finished Goods (at cost or net realisable 2,828,274 —value whichever is less)

2,828,274 —b) SUNDRY DEBTORS

(Unsecured, considered good)Outstanding for a period exceeding six months — —Outstanding for less than six months 1,565,698 —

1,565,698 —c) CASH AND BANK BALANCES

Cash in Hand — —Bank Balances (In Current Accounts) 1,454,528 195,195

1,454,528 195,195

5,848,501 195,195

d) LOANS AND ADVANCES(Advances recoverable in cash or in kind orfor value to be received) Loans and Advances 19,862 2,581,072Security & Other Deposit — —

19,862 2,581,072

Total Rs. 5,868,362 2,776,267

155


SCHEDULE : “5”CURRENT LIABILITIES AND PROVISION :

1. CURRENT LIABILITIESSundry Creditors:Sundry Creditors 1,251,245 —

2. PROVISIONS :Provision for Taxation 47,950 —

1,299,195 —

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

PERIOD ENDED 31ST MARCH, 2010

For the For theperiod ended period ended

31.03.2010 31.12.2008Rupees Rupees

SCHEDULE : “6”OTHER INCOME :

Exchange Difference — 277,777

— 277,777

SCHEDULE : “7”INCREASED/DECREASED IN STOCK :

Closing Stock of Finished Goods 2,828,274 —Less : Opening Stock of Finished Goods — —

2,828,274 —

SCHEDULE : “8”ADMINISTRATIVE & OTHER EXPENSES :

Printing & Stationary 28,501 —Telephone 289,258 —Audit Fees 142,260 —General Expenses 743,121 —

1,203,140 —

SCHEDULE : “9”INTEREST & FINANCE CHARGES :

Interest on Loan 533,997 —

533,997 —

As at 31.03.2010 As at 31.12.2008Rupees Rupees

SCHEDULE : 4NOTES ATTACHED TO AND FORMING PART OF THE ACCOUNTS

1 SIGNIFICANT ACCOUNTING POLICIES :

A) BASIS OF PREPARATION OF ACCOUNTS :The Accounts have been prepared no the basis of the Independent Accountants’ Review Report Receivedfrom DOBRININ AND CO LTD., while preparing Accounts relevance have been kept on the certificate providedby the management.The accounts have been prepared to comply in all material aspects with applicable accounting principles inIndia, mandatory Accounting standards notified by the Companies (Accounting Standard) Rule, 2006 andthe relevant provisions of the Companies Act, 1956. The Financial Statements have been prepared underhistorical cost.

156

OOO Tiara Jewels

B) FIXED ASSETS :Tangible Fixed Assets are stated at cost. They are stated at historical cost less accumulated depreciation.

C) DEPRECIATION :Depreciation on Fixed Assets is provided on Straight Line method over the estimated useful lives of the assets.

D) INVENTORIES :i) Inventories are valued at cost or at net realisable value whichever is lower determined on First in First

out Method.

E) IMPAIRMENT OF ASSETS :i) The carrying amounts of assets are reviewed periodically for indicators of impairment based on internal /

external factors. An Impairment loss is recognised wherever the carrying amount of an asset exceeds itsrecoverable amount.

ii) After Impairment, depreciation is provided on the revised carrying amount of the assets.iii) A previously recognised impairment loss is increased or reversed depending on changes in circumstances.

However, the carrying value after reversal is not increased beyond the carrying value that would haveprevailed by charging usual depreciation if there was no impairment.

F) REVENUE RECOGNITION :Sales are recorded when merchandise is shipped and title and risk of loss are transferred to customers. Salesis recorded net of estimated discounts and allowances which are estimated based on historic trends and anevaluation of current economic condition.

G) EARNING PER SHARE :Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, the net profit or loss attributable to equity shareholders and theweighted average number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares.

H) SEGMENT INFORMATION :The Company has one business segment viz. Jewellery Marketing.

I) PROVISIONS / CONTINGENCIES :A Provision is recognised when an enterprise has a present obligation as a result of past event and it is probablethat an outflow of resources will be required to settle the obligation, in respect of which a reliable estimates canbe made. Provisions are not discounted to its present value and are determined based on management estimaterequired to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date andadjusted to reflect the current management estimates.

J) PROVISION FOR CURRENT AND DEFERRED TAX :Tax expenses comprise of Current Tax.Deferred income tax reflects the impact of current year timing differences between taxable income / losses andaccounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured onthe tax rates and tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assetsare recognized only to the extent that there is reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realized. In respect of carry forward losses deferred taxassets are recognised only to the extent there is virtual certainty that sufficient future taxable income will beavailable against which such losses can be setoff.

2 Estimated amount of Contracts remaining to be executed on Capital Account and not provided for Rs.nil.(Previous year Rs.nil.)

3 PARTICULARS IN RESPECT OF OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK:QUANTITATIVE DETAILS FOR THE YEAR ENDED ON THE 31ST MARCH, 2010

PARTICULARS UNITS OPENING STOCK PURCHASE SALES CLOSING STOCK

QTY VALUE QTY VALUE QTY VALUE QTY VALUERUPEES RUPEES RUPEES RUPEES

B FINISHED GOODS

JEWELLERY PCS — — 475 3,134,702 338 2,395,063 137 2,828,274

(—) (—) (—) (—) (—) (—) (—) (—)

TOTAL — — 3,134,702 2,395,063 — 2,828,274

(Previous year) (—) (—) (—) (—) (—) (—) (—) (—)

157




4 Related party disclosures :1) List of related parties and relationship where control exists or with whom transactions were entered into:

Sr. No. Name of the Related Party Relationshipi) Diagold Designs Limited Holding Companyii) Goldiam International Limited Holding Company’s Holding Company

Sr. No. Nature of Transaction Holding Company2010 2009

i) Loans Received 2,764,500 3,821,250ii) Interest paid 508,335 —a) Outstanding Loan Received as on 31st March 3,272,835 —

Sr. No. Nature of Transaction Holding CompanyDiagold Designs Limited

i) Loans Received 2,764,500(3,821,250)

ii) Interest paid 508,335(—)

a) Outstanding Loan Received as on 31st March 3,272,835(—)


course of business.b) The provision for depreciation and for all known liabilities is adequate and not in excess of the amount

reasonably necessary.

6 EARNING PER SHARE For the period For the period endedended 31.03.2010 31.12.2008

Profit after Tax 273,564 (91,591)Weighted Avg. no. of shares + potential shares outstanding 10000 10,000Earning per share (Basic) 27.36 (9.16)Earning per share (Diluted) 27.36 (9.16)

7 Remuneration to Auditors:Particulars 2009-2010 2008-2009As Auditors 142,260 —Total Rs. 142,260 —

8 The Functional currency of the Company is USSR Ruble, In preparing Financial statement all monetary and non-monetaryassets and liabilities are translated using exchange rate as at the Balance sheet date. Cost and Expenses are translatedusing average of Exchange rates during the reporting period.

9 Previous Year figures have been rearranged or re-grouped, wherever necessary.

158

OOO Tiara Jewels

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE :

1. Balance Sheet Date 3 1 0 3 2 0 1 0

2. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)


N I L N I L

Rights Issue Preferential Issue

N I L N I L

3. POSITION OF MOBILIZATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands)


4 8 1 6 . 3 2 4 8 1 6 . 3 2

SOURCES OF FUNDS


1 5 . 0 2 2 7 3 . 5 6


N I L 4 5 2 7 . 7 4



7 0 . 2 5 N I L

Deferred Tax Assets Translation reserves

1 5 8 . 0 5 1 8 . 8 8


4 5 6 9 . 1 6 N I L

Accumulated losses

N I L

4. PERFORMANCE OF THE COMPANY (Amount in Rs. Thousands)

Turnover / Income Total Expenditure

2 3 9 5 . 0 6 2 0 4 3 . 5 6


3 5 1 . 5 0 3 6 5 . 1 5


2 7 . 3 6 N I L



For and on behalf of the Board

Director Director


GOLDIAM INTERNATIONAL LIMITEDRegd. Office: Gems & Jewellery Complex, SEEPZ (SEZ), Andheri (E) , Mumbai - 400 096.

ATTENDANCE SLIP

To be handed over at the entrance to the Meeting Hall

Full Name of the Member attending

Full Name of the First Joint-holder

(To be filled in if the first named Joint-holder does not attend the Meeting)

Name of the Proxy

(To be filled in if Proxy Form has been duly deposited with the Company)

I hereby record my presence at the TWENTY THIRD ANNUAL GENERAL MEETING of the Company at

‘Tribune 1’ Banquet Hall, 6th floor, Hotel Tunga International, M.I.D.C. Central Road, Andheri (East),

Mumbai 400 093 on 12th August, 2010 at 3.00 p.m.

Regd. Folio No./Benpos No.

No. of Shares held Member’s/Proxy’s Signature

(To be signed at the time of handing over this slip).

----------------------------------------------------------- (Please cut here) -----------------------------------------------------------

GOLDIAM INTERNATIONAL LIMITEDRegd. Office: Gems & Jewellery Complex, SEEPZ (SEZ), Andheri (E) , Mumbai - 400 096.

Proxy Form

I/We

of in the District being

Member(s) of the above named Company, hereby appoint

of in the District of

or failing him,

of in the District of

as my/our proxy to vote for me/us on my/our behalf at the TWENTY THIRD ANNUAL GENERAL MEETING of

the Company to be held on 12th August, 2010 at 3.00 p.m. at ‘Tribune 1’ Banquet Hall, 6th floor, Hotel Tunga

International, M.I.D.C. Central Road, Andheri (East), Mumbai 400 093 or any adjournment thereof.

Signed this day of 2010

No. of Shares

Regd. Folio No.

DP ID NO.

Client ID No.

Affix Re. 1 Revenue

Stamp

Documents

Annual Report 2009-2010 - Goldiam